Campeau Expands Board but Skirts Action on Debt : Retailing: With two important deadlines near, the additions still left unclear who’s in control at the troubled firm and whether payments will be made.
Directors of troubled Campeau Corp., facing a pair of rapidly approaching financial deadlines, failed in a second day of board meetings Tuesday to reach a decision on how to deal with the company’s massive debts.
The only formal announcement from the Toronto-based company, whose two department store divisions are teetering on the brink of bankruptcy, was that its board was expanded from 10 to 12 members. But analysts said the move did nothing to indicate whether the board had resolved the critical issue of who should steer the company through its financial crisis.
Currently, control of the company is split up among several large shareholders. Olympia & York Developments, the big real estate company owned by Toronto’s Reichmann family, is Campeau’s biggest shareholder with a stake amounting to 38.4% once all stock options and bond conversions are exercised.
But the National Bank of Canada emerged as another key shareholder last week when it seized about half of founder Robert Campeau’s stock after two companies he controlled defaulted on loans. The bank now has a stake of 22.5%.
Campeau himself, still the company’s chairman but no longer involved in the operations of its debt-heavy Federated Department Stores and Allied Stores operations, owns or controls a 20.7% interest.
Another key player in the unfolding financial drama is Edward J. DeBartolo, a Youngstown, Ohio, mall developer and frequent partner of Campeau. He holds an interest in Federated itself by virtue of lending Campeau funds to complete the $6.6-billion acquisition of the retail company in 1988.
The two new directors named Tuesday were nominated by the National Bank of Canada. They are: Claude Ducharme, a partner in the Montreal law firm of Desjardins Ducharme, and Roger Smock, the bank’s senior vice president for real estate and corporate banking in the United States.
Remaining on the board are three directors from the Campeau organization, three from Olympia & York and four outside directors. The board’s key restructuring committee, unchanged by Tuesday’s announcement, consists of two O&Y; directors and two outside directors.
The first of Campeau’s financial deadlines comes today when an estimated $100 million in bills from suppliers are due. Campeau spokeswoman Carol Sanger termed the deadline relatively insignificant given the overall size of the company.
Suppliers, however, called today’s deadline critical. “If we’re not paid on the 10th, we won’t make shipments,” said Bernard Chaus, chairman of a women’s apparel company bearing his name.
Probably more important is the deadline arriving Monday, when a lending syndicate led by New York’s Citibank has said it may call in $2.34 billion in loans if certain financial conditions are not met by Federated and Allied.
