Winnipeg Free Press

Winnipeg Free Press (Newspaper) - September 25, 1981, Winnipeg, Manitoba 18 Winnipeg free september some Banks Quick on loan trigger by Waily Dennison the Banks keep claiming they Arent benefiting from High interest rates and that their profits Arent too and it All sounds so very logical and Plauski but the cold As the Banks explain Are less than Cool com fort to Many businessmen bankrupted by escalating there the human fallout of the interest and some Are deeply charging that they went Down without a fighting Chance because Banks and Bank relat de institutions acted too hastily in Call ing in demand Loans and beginning receivership Many of these no Are among the Canadian Busin esses which went Down the tube during the first eight months of this that an average of 625 com pared to 540 monthly last which even at that Point was a bumper As Winnipeg attorney Abe who specializes in commercial and corporate Points out the Canadian Economy is fuelled by demand Bank theres a tremendous responsibility by lenders to be cautious not Only in lending but also to be careful before calling in the on the Bankers have been that Doest console debtors who May have been a Little More Effort and consider the experiences of Jake and John although those Are not their real All claim the by pulling the trigger too were the prime villains in wiping them Joe lost a National Busi Ness he had built from scratch and suffered a heart attack shortly thereof an attack he blames on his conflict with the a factoring company Hal owned by a major 58yearold Joe is fight ing Back with a lawsuit alleging the factoring company illegally placed him into receivership and that their receivers were guilty of factoring most of which Are controlled by Are institutions which buy a firms accounts receivable and lend Money against in their profits come from the interest charged for the two which Are designed to provide the Cus Tomer with faster Cash flow and accounts receivable demand unreasonable Jake and on the other had their ruins with Banks they say were unreasonable in demanding their Money Back two years Jake had a corporation with More than million in assets and a personal net Worth of he owes almost and has no with about a charges that the Bank had been trying to recover its Money illegally while he was Selling off his assets to repay his he says their premature actions prevented him from completing the Sale of of assets so that he could pay off his emerge solvent and Sal Vage his but with the Bank breathing Down his had no Choice but to declare bankruptcy before the Bank could place him into receiver everybody says i could write a Book about what but nobody would believe it since it would appear it did the Jake Points have been telling the Banks in recent years to be realistic on demand Loans that a banker int acting reasonably by Mak ing the demand at 9 in the morning and appointing a receiver at 3 that after a businessman Doest keep hundreds of thousands of dollars on hand just in Case a Bank Calls in its it Doest make any who had Loans totalling with two says the Banks Start to panic when you miss one payment by even a few Days particularly if use vice cured Loans Are As in my he accepts some blame for the de Mise of a year old service business which employed six John also faults the Banks for being too easy and too much the Nice Guy in first extending the Loans and then becoming Nasty when the crunch they we rent willing to sit Down and it was a matter owe want to get paid right on the other cannot very Well answer customers who claim to have been unjustifiably the Banks Are defenceless because they must Honor the confidentiality of individual banker explains we cant go into the streets and reveal Why certain customers or Tell How they failed to follow our advice or that of their says de regional Vic president and Gen eral manager of the Bank of Nova in the Banks Are accused of having been too lax in extending further credit to businesses that ultimately Ranft Points he says the longer a Bank permits a hopeless operation to the greater the Banks exposure to loss and the probability of the company dying a worse death Ranft emphasizes that if is a Las resort and William regional senior Vic president of Toronto Dominion we do our utmost to hang in with the principals and attempt everything possible to preclude petitioning a business Borrower into receivership or Scheidt says if Neces is a move mutually agreed to and undertaken with the it int a matter of the Bank dictating the we feel liquidation should be Volun Scheidt that our objective in termination he concedes that Canada cant live indefinitely with High interest rates because of the very serious consequences of More business but like other leading argues that Banks neither create High interest rates nor Are the benefactors of As he Banks tend to slight a better margin positions As interest rates but see that growth offset when the rates go in any Scheidt says the Public should under stand that margins exert the least influence on the profit growth of profit growth is tied to assets Good management and reduced operating and not to and Royal Bank president Jock in a recent reminded canadians that the Banks and their charges must adjust accordingly when even the country largest the Federal is paying 20 per cent for its customers who Are paying in excess of 20 per cent on Loans can easily forget that they Are also earning just under that on daily interest savings the vital figure to a Bank is the difference Between the two aver Ages the spread Between Overall loan yields on the one and Over All Deposit costs on the Finlayson remarks Are not Alto Gether convincing to the bankrupt he leaving aside the fact that Banks rarely borrow from the Bank of one should look first at their real Money costs that is the difference Between what there paying customers and their own then one would notice that theres a five Point spread Between those real Money costs and their lend ing Jake says the traditional spread of two Points had been in effect until about two years that a 150 per cent margin growth in just 24 the government should get Back into the business of controlling lending rates and legislating the total allowable whatever the John feels Many Bankers dont have the intuitive capacity to Deal understandingly with Small he says they dont realize How much guts and imagination is involved in making an Enterprise the John generally look at individual situations rather Mattero factly and lend solely on the basis of whether an idea appears that same Day but what really irritates him is the contrast Between the Banks matter of fact behaviour when Loans Are first approved and what he labels As their panic and nastiness when they go after recovering their remove any is Call 1 t v the Banks Start to panic when y Oil miss one payment by a few Days even business he says one with a wanted Cash the same Day or a second mortgage on his Home for 000 As full but i was in such bad shape that it would have been impossible for me to come up with that and the Bank knew full Well that i handle the Mort Gage by the time everything was i still owed the Banks in addition to All my regular monthly payments of Joes is perhaps the most pathetic in the three business i was put into involuntary receivership and had to sell a magnificent Home and other the Factor ing company deprived me of my Liveli Hood and i became part of the proceeds from the Home Sale Are being used for family living expenses and for Legal fees associated with his the factoring company is dragging this thing on and believing that ill eventually run out of Money and drop the Joe Joe owed the company for the accounts receivable insurance Pur chased on an interest payback formula based on the current Bank prime plus per and an additional for an inventory loan geared to a interest payback arrangement of prime plus five per their dealings began three years ago a relationship much Shorter than any of Joes 30 Many of whom had been doing business with him since the be not Good enough he says the suppliers we rent pressing him and were confident he would ultimately repay them because we had a 25year track record of integrity in meeting our but Joe says the factoring firms representatives walked into office one Day without notice and handed him a demand they wanted him to sign it and go into voluntary receiver Joe refused because the Compa nys assets were then four times its like the entire in the firm had been suffering a temporary setback due to unseasonable Joe says his company was already in the Middle of a dramatic but that want Good enough for the factoring company which didst go through Normal court channels while moving in on he says they inde and arbitrarily appointed their own any legitimate financial if it had been unhappy with our perform would have conformed with the terms of the debenture agreement and Given As the necessary time to establish alternate sources of Only after failure to come up with alternate sources would such an institution have petitioned for receiver ship or not Only did the factoring company destroy Joe but in dissipating the it left absolutely nothing for his other i spent a lifetime building the Busi and in going to fight that Factor ing company to the bitter second of two the first appeared Oil Price pact reduced vitality of the analysts told project figures differ Federal and Alberta officials will meet the sponsors of two Oil Sands projects to find out Why the govern ments numbers on the commercial viability of the plants dont jibe with those of the Energy minister Marc Lalonde told a news conference in Ottawa yesterday a meeting at the ministerial level could happen once officials determine Why the figures do not he stressed that during the Lalonde same the Federal and Alberta governments will sit on the same Side of the sponsors of the two Imperi Al Oil and Shell Canada have said the new Energy agreement be tween Ottawa and Alberta does not leave them with enough return on in vestment to make the plants in cold Lake and fort Mcmurray economic ally the recent Energy pricing agreement must be upgraded to restore the vitality Canadas Oil and Gas exploration Indus try had in Bud chairman and chief executive officer of Trimaco said in Winnipeg yester whose Calgary based firm is both Canadas largest bulk trucking operation and drilling called for the review while addressing the Winnipeg society of financial analysts in the Maryborough he said the Oil signed by the Alberta and Federal governments Doest provide any meaningful in creases from the National Energy Neps introduction last october chased Many drilling rigs from Canada into the United the agreement does have a quirk in that Oil Sands projects seem less at Tractive than under the 55 fewer rigs Mccaig said Energy agreement improvements Are necessary if the nation is to reach the 1990 Federal goal of Energy he agreed with the Canadian Petroleum association and the Independent Petroleum association of Canada that the Federal Al Berta split from the new round of tax increases is too Large and thus not enough remains for Industry to explore and develop he praised the pricing agreement As positive since it removes uncertainty and reflects increased understanding Between Alberta and Otta on the other Mccaig pointed out that Only 238 rigs Are now drilling in Down to 55 per cent of the 439 which were working last Tri macs share of the current activity is 17 rigs fewer than when the Nep came in last the company currently has 92 60 of them in the the 17 in seven in one in and seven offshore in the Gulf of Mccaig said he viewed Trimas Energy operations with a great Deal of an annual Cash flow of million is expected from its million Canadian Energy investment while an yearly flow is anticipated from its he said Trimas Energy sector will contribute 64 per cent of its revenues this transportation will account for 35 per and other investments about one per net earnings for the first half of this year were compared with million for the same period in a substantial part of this years higher is the result of the acquisition for million of Cactus drilling corporation of dal and its the Deal gave Trimaco 50 drilling rigs in the Continental and seven platform rigs off the Texas and Louisiana operating revenues for the first six months ended june 30 were compared with for the comparable 1980 while Cactus is one of Trimas most successful Mccaig expressed concern Over How rapidly the number of rigs is growing in the the addition of 100 rigs monthly is an unprecedented with now now compared to a year we Are actively pursuing potential Oil and Gas Reserve and property acquisition As the companies continue the Selloff of their Canadian Mccaig we see a Good Opportunity for particularly when you can Combine the acquisitions with potential markets such As the develop ing Alberta petrochemical Industry will polyethylene Plant the company was founded by Mccaige father 36 years ago and began As a Small trucking outfit in Moose in the past six years Trimas Revenue has grown sixfold from million to the projected million by the end of this while shareholders equity has risen 10 times from million to an estimated total assets of million at june 30 were eight times higher than the million in due to the economies of bulk Han Mccaig said Trimas bulk transport business grows at a higher rate than other forms of it hauls liquid and dry bulk commode including Petroleum be edible fertilizers and Mccaig also said Trimaco Canadian industries of Montreal will build a million Edmonton Plant which will produce the first medium and High density polyethylene manufactured in the factory will be capable of producing tonnes he High density polyethylene is now imported from the Mccaig pointed we see replacing those inv ports with Canadian product and eventually reversing the current Situa Tion by exporting to fill a growing need in the United states and the Pacific he also referred to two recent con tracts of Tricia Canadas largest toxic waste manager and jointly owned by Trimaco and Canadian industries one is a million contract to modify and operate for 15 months a system in that produces Energy from municipal a con tract clause provides the Opportunity of negotiating a 10year operating agree the other with the Prince Edward Island Energy corporation for is for the building and operating of a similar Plant near Mccaig said Tricia is excellently Sitione in North americas developing liquid and solid waste management ;