Brent Belzberg fought Imperial Capital valiantly
Skip The Last Dance. I’m starting my own docudrama that will talk about things that happened in the 1990s. Andrew Willis of the Globe wrote on Wednesday about the start of a new high-powered debt fund. Private Debt Partners wants to start a fund with $750 million.
Stephen Lister is behind the project, and he also took on the role of chair. He is a successful businessman who doesn’t get much attention. I didn’t know his name until I was researching the Belzberg saga, which I wrote about last year.
I’m impressed by how much money I think that Jordan documentary could make, even though it’s mostly old footage and interviews telling a story that almost everyone already knows. Too much is made of creativity! I guess there are other ideas like that that are easy to miss.
The risk-taking, value-driven filmmaker would have probably said that Michael Jackson has been done to death and that a documentary about Muggsy Bogues is where the real opportunity lies. Anyway, I’m starting up my own Belzberg series all over again. This time, I’ll talk about a fight between big names on Wall Street in 2001, in which Stephen Lister and other big names were involved.
To review what I said before, Sam Belzberg built an empire called First City Financial in the 1980s. But in the early 1990s, it crashed like Trump because it had too much debt. At the shareholders’ meeting in 1991, Sam’s nephew Brent Belzberg took over from him.
Then, he oversaw a complicated plan to deal with $2.3 billion in debt and 4,000 bondholders. Some of his creditors got so mad that they sent him death threats. In the end, First City changed its name to Harrowston, but it only had a few assets left.
Back then, reporter Patricia Best wrote a lot about this, and I’ve taken a lot of her ideas. After Harrowston was reorganized, Brent started buying shares in private companies. He did this to make a smaller version of Onex. But Brent liked cheap value investments and Old Economy plays, and when tech mania hit in the late 1990s, that style went out of style (not unlike today).
By the year 2000, Harrowston’s stock had not moved for almost six years and was trading at a 40% discount to its net asset value. Ira Gluskin told the Globe the following quote that showed how investors felt:
“Brent has been too cautious for a long time. He says that values are too high, but they have always been high. He doesn’t want to take the chance.”
Wow! That’s a great public insult! And people say that snark was made by millennials on Twitter. Even more surprising is that Gluskin hasn’t been openly criticizing the Catalyst funds he’s invested in recently.
In May 2001, an investor named Unity Capital bought about 11% of Harrowston’s shares and made a hostile bid for about $160 million in cash and stock. They basically used the Belzberg family’s own game plan against them.
The plan was to split the company up and give the money to the shareholders. By using paper, they were using the target’s own money to pay for the acquisition. Bold! Harrowston obviously said no, since they could break up on their own.
TD Capital saved the day in the end by making a friendly all-cash bid worth $210 million for the company. This was not a bad result, given that Harrowston started out as a bankrupt shell that traded for pennies.
Lawrence & Co., which was run by Bay Street star Jack Lawrence and Imperial Capital, used Unity Capital to do business. Jeff Rosenthal and Stephen Lister were in charge of running Imperial Capital. This person is now the head of Private Debt Partners. Taking on Harrowston was a pretty brave move for these two newcomers, who were still in their 30s at the time.
In the same March 2000 Globe article, reporter Patricia Best quotes Brent, who was around 50 years old at the time, as saying, “Thanks a lot for calling, nobody calls me anymore.” Sad! A few months after selling Harrowston, Brent started a private equity firm called TorQuest.
It raised $135 million for its first fund with the help of four big banks and Teachers. And Torquest closed its fifth fund at $1.375 billion in March 2020. So you could say that Brent made a big comeback. The quote about no one calling Brent made me wonder: Which mogul might be down and out right now, but has the potential for a spectacular comeback? Give me a moment while I order Bonnie Bloomberg some flowers.
Torquest looks at private equity in a kinder, warmer, and gentler way. This is probably enough to make Sam turn over in his grave. Because he has so many friends, Brent Belzberg is called the “mayor of Bay Street.” But if Ozark and Narcos taught me anything, it’s that when you make an enemy, you also make three friends.
So much better with math! Think about how much trouble there was in what I just told you. Brent first got a job in 1979 as an assistant to Sam Belzberg. When Brent took over, Sam had been running First City for 35 years. After that, they didn’t talk any more.
Ira Gluskin makes fun of Brent when he’s feeling bad. Jack Lawrence gives money to Imperial Capital to help it make a hostile bid. As a white knight, TD Capital (now Birch Hill) comes along and takes it away. That’s a lot of reasons to feel bad about someone.
Even though these people had fights in what was supposed to be a close-knit business community, they all did well in the end. Maybe they all got along and are now one happy family, but that would only prove my point: being mean doesn’t cost much in the long run. This will only make OPM Wire stronger. I’m going to stop sending flowers to Bonnie Bloomberg.
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