BUSINESS

Return engagements

Hot deal-makers of the 1980s stage comebacks

JOHN DALY May 3 1993
BUSINESS

Return engagements

Hot deal-makers of the 1980s stage comebacks

JOHN DALY May 3 1993

Return engagements

Hot deal-makers of the 1980s stage comebacks

Last year, Canadian corporations raised $13.2 billion through new share issues, the highest total since 1987. This year, the pace is accelerating. But while the shares are new, many of the tycoons offering them are familiar figures. Among them are four deal-makers who fell from grace during the 1980s. Three are now the darlings of investors once again: Garth Drabinsky, chairman of the Toronto-based theatrical company, Live Entertainment of Canada Inc.; Terry Matthews, chairman of Newbridge Networks Corp., a Kanata, Ont.-based computer systems manufacturer; and Allan Markin, chairman of Calgary-based oil and gas producer Canadian Natural Resources Inc. But a fourth, former financier Gerald Pencer, chairman of Mississauga, Ont.-based soft-drink maker Cott Corp., has stumbled again after a popular new issue just two months ago.

Starting from scratch in the early 1970s, Garth Drabinsky built Cineplex Odeon Corp. into the second-largest movie theatre chain in North America. By 1988, the company had 1,300 screens across the continent. Never one to wait for applause from others, Drabinsky himself hailed Cineplex as “the single greatest influence in the industry.” However, in December, 1989, he resigned as chairman after a lengthy public dispute with Cineplex’s largest share-

holder, Los Angeles-based MCA Inc. But as part of his separation agreement, Drabinsky and his partner, Myron Gottlieb, bought Cineplex’s live theatre division, including the Canadian rights to the hit musical The Phantom of the Opera. The company has also staged Joseph and the Amazing Technicolor Dreamcoat and Kiss of the Spider Woman, and plans to revive the 1927 musical Show Boat.

In March, Drabinsky, 44, announced an initial public offering of $30 million worth of shares in Live Entertainment. Last week, Drabinsky mounted a road show of his own, meeting privately with stockbrokers and institutional investors in six cities across Canada. The initial reviews were favorable.

Few executives have had as much experience with extreme swings in stock prices as Terry Matthews, 49. In 1971, he co-founded Mitel Inc., a telephone switching systems maker that became the brightest star in a cluster of new high-tech companies near Ottawa. But in the early 1980s, Mitel suffered delays in developing a complex new digital switching system. Its stock plummeted and Matthews resigned as president in October, 1985.

Undaunted, he quickly formed a computer systems company, Newbridge Networks Corp. It too has had a spectacular ride on the

stock market. In 1990, short sellers drove down the price of Newbridge stock to $10 from $21. But the stock soon rebounded. In December, Newbridge raised $105 million from an issue of new shares at $41.55 each. Last week, Newbridge shares closed at $74.12.

Allan Markin knows all too well what can happen if an oil and gas executive’s attention strays too far from his core business. During the Alberta oil boom of the early 1980s, Markin was president of Poco Petroleums I Id., a medium-sized company that often spent like a large one—includ-

is ing maintaining a hunting g lodge northeast of Calgary. I Markin drove a $67,000 silver I Jaguar with customized licence t plates that read POCO OIL. But I in 1988, Toronto-based Corona “ Corp. took over the company,

vowing to cut costs, and Markin resigned.

After eight months of soul-searching, during which he converted to Roman Catholicism, remarried, cycled through Europe and read Shakespeare, Markin returned to head up tiny Canadian Natural Resources. Within six months, the company’s stock quadrupled to 91 cents and kept climbing. On April 15, Canadian Natural Resources announced an offering of two million new shares at $27.50 each, scheduled to close on May 11. Last week, Markin, 47, downplayed his comeback. “We try to keep a low profile these days,” he said.

Just two weeks ago, Gerald Pencer was on quite a roll. Over the past year, his softdrink company, Cott Corp., which makes President’s Choice soft drinks and other private-label brands, has been one of the hottest stocks on the Toronto Stock Exchange. On March 10, Cott closed a sale of 1.2 million new shares at $35 each. On April 13, Cott shares hit $47.75. By then, it appeared that Pencer had finally washed away the bad taste he left in many investors’ mouths following the 1988 breakup of Financial Trustco Capital Ltd., the Calgary-based trust company that Pencer had tried to turn into a national financial services giant.

After that debacle, the bearded Montreal native joined the small beverage company his father, Harry, founded in 1955. Since then, Cott’s sales and share price have climbed steadily. But last week, investors rushed to sell Cott shares amid rumors that Coca-Cola Co. and other brand-name giants will soon slash prices. Cott’s stock closed at $37.50. But as Pencer and the other executives who have cashed in on the new issue frenzy are well aware: what goes up usually comes down.

JOHN DALY