First City Financial’s Chairman Quits

Samuel Belzberg, who helped build the Canadian financial empire of First City Financial with stakes in such U.S. companies as GTE Corp., Ashland Oil Co. and Southland Corp., has resigned as its chairman.

Brent Belzberg, who took over as chief executive of First City Financial in March, said Monday that his uncle resigned because his aggressive approach no longer meshed with the wishes of the Vancouver-based firm’s directors.

“Our philosophy for the ‘90s just didn’t suit his operating style and the board felt more comfortable and he resigned,” Brent Belzberg said after the company’s annual meeting. “The board made the decision. . . . Everyone seemed to side with that decision--even Sam.”

Samuel and brothers Hyman and William, who helped build the company, were reelected directors at the meeting, which only Hyman attended.

Under Samuel’s direction, First City Financial grew rapidly during the 1980s by using junk bonds to buy stakes in other companies and later selling those stakes at a profit.

But the high cost of junk bond financing and losses on investments and trades left the company with a sizable loss last year, forcing it to restructure debt and cut costs.

Brent Belzberg denied a published report that Samuel was forced out by his brothers. The Toronto Globe and Mail cited an unidentified executive who had dealt with the family as its source for the report.

Samuel Belzberg stepped down as chairman of a subsidiary last month and said he planned to leave the parent company. He turned over control of First City Financial to his nephew in March.

Brent Belzberg said the company is renegotiating some loans and extending others. He said First City Financial should emerge as a smaller company with two main holdings, First City Development and First City Trust.

Belzberg said it will take time to restore the company’s financial health.

“We’re going to take as many hits as we’re going to need to take to clean up this place over the next year,” he said. “Then we’re going to return--slowly--to an element of profitability over the years.”