Last October’s stock market crash left a deathly pall over much of the market but it has not deterred one equity issuer—The Loewen Group Inc., a funeral home operator. Last week the Burnaby, B.C.-based company announced a new issue of $10 million in preferred shares. The money will help fund a $34-million funeral home acquisition drive in the United States and Canada, where family-run operations sell for an average of $1.5 million each. And according to Raymond Loewen, the company’s 47-yearold president, the expansion to 100 homes will nearly double Loewen’s annual revenues to $51 million and make it the second-largest funeral services company in North America, after Houston, Tex.-based Service Corp. International. But Loewen, a former B.C. Social Credit backbench MLA, added: “I do not like to call it acquisition. We see oui selves as a service to retiring funeral home directors, whose children do not want to follow in their footsteps.” Loewen’s buying spree is evidence of a booming Canadian funeral trade that is benefiting from the growing ranks of the elderly. Indeed, Statistics Canada estimates that by the year 2000 roughly 3.4 million people will be over the age of 65, compared with 2.7 million in 1986. Throughout North America, the battle for burial dollars has led to new products, including videotaped funeral services and funeral home franchises, which some observers have called “McMortuaries,” after the McDonald’s fast-food chain. But in Canada, the extending reach of Loewen Group and its main competitors, Arbor Capital Inc. of
Toronto and Service Corp. International, has met resistance from some consumer groups. Said Peggy Smyth, spokesman for the Consumers’ Association of Canada: “We have evidence that, in British Columbia, buying out independents has changed the whole death-care industry into one-stop shopping.”
The growth of the chains has forced some rivals to defend their market with a commissioned sales force that aggressively sells prepaid funeral arrangements. Ontario residents alone now have $250 million in prepaid funds designated for caskets and funeral services. But in the past five years bullish tactics have alienated many consumers. Some funeral homes have been convicted of defrauding clients of prepaid funds. And Smyth said that her association has received calls from dozens of elderly widows complaining about highpressure telephone solicitations.
Last week Loewen argued that a large corporate parent can offer economies on everything from hearse fleets to accounting. (The average price of a funeral in Canada is about $3,000.) But he did say that customers tend to pay about 15 per cent more for a package funeral after Loewen Group acquires a funeral home, because the management tends to improve service and facilities and upgrade the quality of caskets and other merchandise. Last week, as the undertaker went to the underwriters, Loewen was assured of one thing: whatever the price, the market for funerals will never die.
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