BUSINESS

An Eastern buying spree

CHRIS WOOD May 27 1985
BUSINESS

An Eastern buying spree

CHRIS WOOD May 27 1985

An Eastern buying spree

BUSINESS

The executive suite of Newfoundland Capital Corp. Ltd. occupies a discreet corner of a modest office block in Dartmouth, N.S. In the office of Harry Steele, the crusty 55-year-old president and majority owner of the firm, is a plaque that reads, “He who dies with the most toys, wins.” Steele, a former career naval officer and the son of a poor Newfoundland outport fisherman, has owned some impressive toys during his controversial 15-year business career, including his own airline. Earlier this month he added to his collection when he bought—for an undisclosed sum—the largest publishing chain in Newfoundland, Robinson Blackmore Printing and Publishing Ltd. of St.

John’s. But the purchase is only the beginning of a buying spree; Steele is making no secret of the fact that Newfoundland Capital is on the prowl.

The firm has been stalking Eastern Canadian targets since April,

1984, when it sold Eastern Provincial Airways Ltd. to Canadian Pacific Air Lines Ltd. of Vancouver. The sale left Newfoundland Capital with $20 million in cash and the ability to mobilize another $80 million.

Healthy profits from Clarke Transport Canada Inc., a wholly owned subsidiary based in Montreal, have further gilded the nest egg. Boasted Steele, who controls publicly traded Newfoundland Capital through a 47-per-cent interest: “We have a big capital pool and virtually no debt.” He added, “We are looking closely at the financial industry and we are going to look at more in the communications industry.” Among possible targets are a radio station chain in Newfoundland and a New Brunswick high-technology company.

With the purchase of the Robinson Blackmore chain, Steele has acquired 11 of Newfoundland’s 17 weekly community newspapers. The company has two printing plants, 175 employees, a combined newspaper circulation of more than 100,000 and $10 million in annual sales. Some observers predict that Steele will eventually expand the chain’s weekly, The Metro, in St. John’s

into a daily newspaper to compete with Thomson Newspapers Ltd.’s The Evening Telegram. Steele told Maclean’s that he was attracted by Robinson Blackmore’s profits and opportunities for future growth. But Steele’s main reason for getting out of the airline industry and into newspapers had more to do with the problems he encountered during his stormy career running a business that was tightly restrained by government. Said Steele: “We wanted to get away from regulated industries under government control.”

Steele bought Eastern Provincial from a fellow Newfoundlander, Andrew Crosbie, in 1978 for $5 million. Steele quickly swept out EPA’s management suite, and by 1982 his newly appointed executives posted an $877,000 profit, compared to a loss of $1.2 million in 1977. But Steele’s iron will and sharp tongue also caused turbulence at the airline. During a bitter 134-day strike by air crews Steele compared his pilots to bus drivers.

The controversial comment was a typical remark for the ambitious and aggressive Steele. “You either love me or hate me,” he once said. Among his friends he counts Prime Minister Brian Mulroney, Nova *"**■*'*■' o Scotia Premier John Bu1 chanan and former New^foundland premier 8 Frank Moores. As well, most of Newfoundland Capital’s 400 minority shareholders appear to be admirers. With Steele at the helm, the company’s worth has increased to $36.4 million in 1984 from $3.5 million in 1979. Said shareholder, friend and Newfoundland Capital director John Fleming, chairman of Bonanza Resources Ltd. in Calgary: “It is basically Harry’s company.”

In his Dartmouth office Steele recently savored his latest business manoeuvre as he leaned back in a flame-colored chair, a cocky grin animating his long face. “I am fascinated by business,” he told Maclean’s. “I am fascinated by takeovers, by selling, by finding a deal that makes sense. I like the game.”

CHRIS WOOD in Halifax.