Canada Bank Seizes Stake in Campeau After Loan Default

The National Bank of Canada seized a 35% stake in ailing Campeau Corp. on Thursday after founder and Chairman Robert Campeau defaulted on an estimated $155 million ($180 million Canadian) in loans made to one of his private companies.

The stake, lodged as collateral by two of Robert Campeau’s privately held companies, was seized to strengthen the bank’s hand in the restructuring negotiations of ailing Campeau Corp. currently under way, National Bank spokesman Leon Courville said.

Analysts said the bank also moved to protect its interests in case Campeau Corp.’s U.S. retailing units file for Chapter 11 bankruptcy protection. Campeau’s debt-laden subsidiaries face a Jan. 15 deadline set by Citibank over loans totaling $2.34 billion made to them.

Toronto-based Campeau Corp. has run into serious trouble after taking on nearly $9.5 billion in debt to acquire two big U.S. retailing companies in the past three years.

National Bank’s Courville said the 35% of Campeau voting stock, deposited by Robert Campeau as a security, was seized from 752090 Ontario Inc., a company wholly owned by the French-Canadian chairman of Campeau Corp.