For five days last month British Columbia’s experiment in people’s capitalism looked as if it might live up to its long-suffering shareholders’ expectations. For one thing, the B.C. Resources Investment Corp. (BCRIC) was invited to join a project worth $4 billion to ship liquefied natural gas to Japan. That boosted BCRlC’s stock price from $2.50 to $3.25 a share—a level that the resource company had not enjoyed for months. Then, five days after Dome Petroleum Ltd. extended the invitation, Premier William Bennett lifted BCRIC shareholder restrictions. The move was a dramatic change for BCRIC, the umbrella company that his Social Credit administration formed in 1979 by selling $152 million worth of government-owned assets to the firm and then giving away 10.5 million of its shares to B.C. residents. Bennett’s action removed limits that restricted individuals to one per cent of BCRlC’s shares and pushed the price of BCRIC stock still higher, to $3.40 a share.
But that move turned BCRIC into a company much like any other publicly traded firm—opening up the possibility that it might become a takeover target. It was an ironic turnabout because of BCRlC’s history of acting as a corporate predator, making takeover bids of its own, secure in the knowledge that it was safe from being swallowed up at a later date. The company that was supposed to give British Columbia “a piece of the rock,” in the premier’s phrase, actually delivered the largest forestry firm in the province to eastern control after flubbing a takeover bid that left MacMillan Bloedel Ltd. vulnerable to seizure by Noranda Mines Ltd. of Toronto.
Originally BCRIC was seen as a firm that would be owned by the province’s citizens. “We have in effect guaranteed the British Columbian dominance of ownership,” Bennett said in 1979, not long after he offered each resident of the province five free BCRIC shares, each then worth $6. Not only that, but Bennett also declared at the time that no group would dominate the new company.
The excitement surrounding last month’s activity passed quickly, and BCRlC’s five-day flourish has ended. Share prices are once again slumming below $3. The company’s forestry subsidiary is suffering with the rest of the industry, while Japanese steel mills cut shipments of BCRIC-mined coal in August by 30 per cent because of the depressed world steel market.
Still, although the excitement has faded, the removal of the share restrictions does hold some promise for the company, currently weighed down by a debt load of $719 million (an amount almost equal to shareholders’ equity). Should it join the Dome gas project, BCRIC will be able to exchange shares with the Calgary-based oil firm or raise cash with pew share offerings. But the largest dividend from the deal is political and likely to be paid to Bennett. Withthe share restrictions gone, the government has lost its last direct tie to the company, which became a political
liability when B.C. residents bought stock at the government’s urging, only to find their share value drop like a stone. Besides, in the future, if the company is threatened by outsiders, the government can still move in to block their takeover bids. There is even a Bennett slogan available: “B.C. is not for sale.” Unfortunately, it was last used by the premier when he prevented Canadian Pacific Enterprises Ltd. from taking over MacMillan Bloedel—before BCRIC launched its unsuccessful attempt to keep the firm in western hands.
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