The Gazette from Montreal, Quebec, Canada • 21

SECTION Inside: SPORTS Making your money 9row Interest rates PageC-3 Payroll Labour Distribution WE DO IT BEST! (514)382-3330 COMPUTER SOUTONS WITHOUT COMPUTER PROBLEMS MONTREAL, THURSDAY, AUGUST 16, 1984 www 111-3 MP! El Pfl FP3 Tele-Capitale sale would create new network HUGH ANDERSON 0 costs during that period totalled $4.4 million." Cutting those bills by as much as two-thirds "is the difference between losing money or making a profit," he noted. However, Rougeau added that La Verendrye is giving up a lot to shore up its balance sheet. The Tele-Capital assets, he said, "were probably the company's best," better than the road transportation interests that make up the bulk of the firm's other assets. French-language broadcaster operates TV stations in Sher-brooke and Trois-Rivieres. Completion of the sale is subject to the approval of the Canadian Radio-Television and Telecommunications Commission.

If approved, the sale in effect would create a third French-language television network in Quebec. And it would extricate La Verendrye from a crushing debt burden that has plagued the company since it borrowed heavily, first in 1979 and later in By JACQUES ROY of The Gazette La Verendrye Management Corp. said yesterday it has agreed to sell, for an undisclosed amount, wholly owned Tele-Capitale Ltee to Pathonic Communications Inc. of Montreal. Tele-Capitale's main assets are television stations transmitting out of Quebec City and Ri-mouski.

Pathonic which is 34 per cent owned by Tele-Metro-pole the province's biggest most five years in the red, could become profitable soon. Prior to the purchase of a stake in Tele-Capitale in 1979, La Verendrye's interest costs added up to about 3.25 per cent of annual sales. But the combination of borrowing to acquire Tele-Capitale and high interest rates in recent years boosted the interest burden to almost seven cents per revenue dollar. Rougeau said La Verendrye lost "about $1 million in the first six months this year and interest 1982, to buy Tele-Capitale. In a statement, La Verendrye said the deal would enable it to pay off about two-thirds of its $62-million long-term debt, a igure considered by market analysts much too high because the company's shareholders capital is only $25 million.

"The sale would certainly relieve the strain on La Veren-drye's finances," said Pierre Rougeau, an analyst with Geof-f rion Leclerc Inc. of Montreal. And La Verendrye, after al Enjoy the drop in interest rates Canadians are enjoying a welcome and overdue respite from climbing interest rates. It's probable that the closely watched but rarely charged Bank of Canada lending rate will go down again today. Argentine talks take major turn If so, that will be the fifth successive weekly drop in this key indicator of official policy on interest rates.

It's actually just the interest rate charged by the government's bank on the occasional loans it makes to Canada's commercial banks, but the big lenders in the financial system take their cue from its iviAiiAiMAntri I UttL i i lrM The Gazette, Pierre Obendrauf Studio du Verre owners Garth Jenkins (left) and Jeff Scheckman show off some of their work. Small stained-glass company opens doors to world markets with windows for Algeria far this year, a 15 per cent increase over last year. The Studio du Verre was chosen from among four firms that bid for the contract. The selection means that the company, which opened in Montreal in 1982, has steady work in what is usually a seasonal business. (Hobbyists often stop stained glass work in the summer and architectural or renovation work occurs mostly in the spring, according to Scheckman.) The company plans to expand its business into other international markets where stainedglass is considered a serious art form, and not just a novelty decoration.

The next project the Studio du Verre will tackle is a condominium project in Saudia Arabia. and West Germany, Jenkins said. More than 2,000 square feet of the glass will be used in about 100 different colors. An Alergian artist initially drew sketches of what that government wanted portrayed in the windows. Then Quebec artist Jacques Lajeunesse, who works with the Studio du Verre, interpreted the drawings so that they would be suitable for stained-glass design.

Each of the five windows stand 25 feet high and 20 feet wide a total of 24 separate panels and depict scenes of Algeria's military, its heroes and its turbulent history. To assist in completing his design for the giant windows, Lajeunesse has erected paper replicas of them on scaffolding in his barn in the Eastern Townships. The Lavalin contract boosted sales for the stained-glass company to $700,000 so By FRAN HALTER of The Gazette A small stained-glass company and Canada's largest engineering and construction firm have found common ground. A $160,000 contract was awarded to the Studio du Verre in Old Montreal to manufacture a series of massive stained-glass windows for a museum now under construction in Algiers by Montreal-based La-valin Inc. "The deal is believed to be the largest export contract ever awarded to a Canadian stained- glass manufacturer," said Garth Jenkins, who with Jeff Scheckman owns the store-front retail and wholesale operation on Bonsecours St.

The glass used by several trained artisans working full-time on the project is hand-blown and imported from France NEW YORK (UPI) The Federal Reserve Bank of New York yesterday transferred $125 million from the account of Argentina to the books of 11 large international banks to repay a loan the banks refused to extend. "It was a bookkeeping transaction and not a major deal since the money was there to secure the loan," said one banker. "The real importance of the repayment is that it represents a symbolic turning point in the negotiations." The transfer of the money was automatic when the banks decided, after two days of intense negotiations, not to roll over a loan that was extended to Argentina on June 29 by the 11 international banks representing more than 300 banks who have loans to Argentina outstanding. In the case of non-American banks the money went into the account of a U.S. correspondent bank that would then complete the transfer.

The official announcement did not come until near midnight Tuesday, but the decision apparently had been made early on in two days of talks between the banks and an Argentine delegation led by Economy Minister Bernardo Grinspun. Hoping for a roll The hard line taken by banks surprised Argentine officials, who were thought to have asked for a 45-day to 60-day extension. "It's safe to say they were hoping for a roll," said one banker. "There were some hairy moments in the talks, but it's important to emphasize that near the end there was a definite spirit of co-operation from Argentina," said one banker who was present for some of the talks. There were a number of reasons that individual banks took the hard line, but there was unanimous agreement that the principal one was the failure of Argentina to produce a letter of intent from the International Monetary Fund.

In the past, the fund has indicated to the banks that it favored a rollover of Argentine loans without a program. But in this instance the IMF was neutral, bankers said. Stalled on debt Since the government of Raul Alfonsin took office late last year, Argentina has stalled in coming to grips with negotiating on its foreign debt, some say on the assumption that banks and governments would go along precisely because it was a freely elected democratic regime. Argentina has a lot at stake in reaching agreement with the IMF. It will need to borrow at least $3 billion next year and will have to go through the bank advisory committee to do so.

HowdoTknowthe fY Bank of Canada is He's not telling going to lower its loan charge? No, it's not because I have a direct line to its governor, Gerald Bouey. And I certainly don't know for sure. The unexpected can always happen. Related to real world It's merely because of the way the bank sets the rate, and the fact that the number is not just picked out of the air. It does have some relation to what's going on in the real world.

The bank fixes the rate each week at a quarter of a percentage point above the average interest rate the government pays on cash it borrows through selling three-month treasury bills in the financial markets. A treasury bill is a sort of government IOU. There are billions of dollars worth of them, representing short-term loans to the government by financial organizations and investors of all kinds who have cash to spare and like to earn some interest on it. Every week the government's financial managers hold a sort of auction in the national money markets. Professional market dealers bid for the bills, which are sold, in effect, to the highest bidders that is, to those who are prepared to take the lowest interest that day.

Leaning against wind But the auction can be, and often is, partly" rigged. In several complicated ways, the Bank of Canada can influence the results. So what emerges is usually the combined consequence of market forces and official nudging. For instance, the people at the Bank of Canada do not like interest rates to change too quickly or dramatically, either up or down. So they generally lean against the prevailing wind in the markets, so to speak.

Right now, for example, market pressures are pushing interest rates down. But the bank's people are resisting, making it clear to market players in various ways that they would prefer to see the Bank of Canada rate go down in small stages. For the life of me I've never been quite able to see why this is desirable, except to satisfy some bureaucratic sense of orderliness. But right now it's enough for me that the cost of credit is coming down again. Last week the banks lowered what they charge their customers for floating-rate loans of all kinds.

And house mortgage rates and the cost of consumer loans are being cut steadily. A lot of money This reflects two principal factors. The most important is the good old law of supply and demand. There is a lot of money swirling around in the financial system looking for useful employment at a decent return. But the climb in interest rates so far this year had cooled the enthusiasm of borrowers.

Second, there is the rejuvenation of Canada's dollar in the foreign currency markets. After months of losing ground against the mighty U.S. dollar, it's dug in its heels and even risen a bit. This means the Bank of Canada no longer feels obliged to engineer a rise in Canadian interest rates just to "defend" the foreign exchange value of our dollar. The idea was to lure international ir estors into placing their capital in Canadian-dollar investments, and so artificially increase the demand for the Canadian currency.

Will these trends continue? As ever, the ex-perts are divided but this time for good reason. I'm afraid. For the moment, my best advice is to relax and enjoy what's happening. Quebecers pay most to own and drive a car By BRIAN DUNN of The Gazette Like everything else, the cost of owning and operating a car has gone up this year, and Quebec leads the way. According to figures released by the Canadian Automobile Association, it costs 7.35 cents a kilometre to operate a car in Quebec.

The next highest cost, 7.25 cents, is shared by Prince Edward Island and Newfoundland. Based on the average of kilometres a year that Canadians drive, it costs $160 more a year to operate a car in Quebec than it does in P.E.I, or Newfoundland. Operating costs include the cost of oil and gas, maintenance and tires. The figures are based on a 1984 Chevrolet Citation six-cylinder model with four doors and automatic transmission, reimburse employees who use their cars for work this year, the cost is 26.4 cents per kilometre based on 16,000 kilometres travelled a year. The cost decreases to 19.9 cents for 24,000 kilometres and 17.2 cents for 32,000 kilometres.

"The more you drive, the cheaper it is simply because, while your fixed costs are the same, your variable costs would be divided by a lower number," MacNeil explained. Because fuel prices will continue to rise, the CAA points out a few items that affect mileage. Mileage is reduced 1 to 2 per cent for every 45 kilograms of added weight of the car. While running, an air conditioner can reduce mileage by as much as 20 per cent. Fast acceleration and hard braking use about 15 per cent more gasoline than normal acceleration and braking.

which is considered to be an average car in terms of size, weight and fuel efficiency. Alberta and Saskatchewan have the lowest car operating costs at 5.95 cents a kilometre; the national average is 6.76 cents a kilometre. Although the CAA does not have a breakdown of costs by province for last year, the national average in 1983 was 6.02 cents per kilometre. New Brunswick leads all provinces in terms of fixed costs of operating an automobile, which includes insurance, licence and registration fees and depreciation. The fixed cost of owning a car in New Brunswick is $9.15 a day, compared to the national average of $8.63 a day.

Quebec was second highest at $9.03 a day and Saskatchewan was lowest at $7.83 a day. The national average fixed cost has actually fallen this year from last year's $8.79 a day. "That's because insurance costs have decreased this year," explained Michael McNeil, CAA public relations director. "The national average cost of insurance last year was $689, compared to $647 this year. "Operating costs are up because the average gas price across the country has gone from 44.9 cents a litre last year to 51.8 cents this year.

The cost of tires has also gone up, but maintenance costs have remained the same." MacNeil said Quebec's operating costs are so high because of the gasoline prices here. "Quebec has the most expensive gas in Canada as a result of the 30 per cent provincial sales tax, compared to the national average of between 18 and 20 per cent." For companies trying to figure out how much they should Three provinces foreseen taking brunt of downturn after expanding by 2.2 per cent this year. Prince Edward Island's economy will grow by 1.4 per cent next year but that's still well off the 3.1 per cent growth expected this year. Nova Scotia's economy will expand by 0.6 per cent, off from this year's 3.1 per cent, and New Brunswick's will increase by 0.8 per cent, down from 2.8 this year. In 1984, Manitoba's economy will expand at a pace second-fastest among the provinces, with growth of 3.9 per cent.

But in 1985, it is expected to slip back to the middle of the pack with growth of just 0.5 per cent. Saskatchewan will post the highest rate of growth next year but, even here, output is expected to grow by only 1.6 per cent compared with 2.9 per cent this year. Gazette, CP ticular importance to Ontario rubber, autos and auto parts -that will bear the brunt of the 1985 contraction." The forecast offers no comfort to the 1,326,000 Canadians currently unemployed, with projected jobless rates next year ranging from 19.5 per cent in Newfoundland to a low of 7.4 per cent in Saskatchewan. Unemployment in Quebec is forecast at 13 per cent for 1985, unchanged from this year but well above the forecast 1985 national rate of 11.8 per cent. The Conference Board, in its national forecast released earlier this month, predicted high interest rates will push the Canadian economy into a virtual recession next year.

That forecast, criticized by some as being overly pessimistic, called for economic output to slide by 0.2 pec cent, unemploy While it may be small comfort to Quebecers, the board said the anticipated slump in this province is only "half the decline anticipated in Ontario," where output is expected to drop a full percentage point next year after rising 4.8 per cent this year. The board noted that, in 1982, production of goods and services in Quebec fell 5.7 per cent, "a much more severe decline that the 4.3-per-cent recession in neighboring Ontario. "Quebec's disadvantage in 1982 lay in the comparative importance to the province of a number of manufacturing industries clothing, footwear, wood products that were particularly battered by the recession. "In 1985, by contrast, concentration in these industries will help to insulate Quebec from the manufacturing slowdown. It is manufacturing industries of par ment, the federal deficit and interest rates to rise and corporate profits and the value of the dollar to alL Rising interest rates are also to blame for the somewhat weaker projections for some of the provinces next year, Gilles Rheaume, the board's assistant director of regional economic forecasting, said in an interview.

However, he said different factors are coming into play as well to boost or dampen growth in each of the provinces. Output this year in British Columbia is projected to decline by 0.1 per cent and then grow by 0.8 per cent in 1985. In Alberta the value of production will slip by 0.6 per cent this year and then increase by 0.6 per cent next year. In Newfoundland, output will fall by 0.S per cent next year Quebec, Ontario and Newfoundland will be hardest hit by what the Conference Board of Canada predicts will be a virtual recession in the country next year. The economic outlook for most provinces has deteriorated in recent months and growth in all but two British Columbia and Alberta is expected to slow or decline next year, according to the board's latest quarterly provincial forecast "Quebec's forestry, mining and manufacturing industries will cut back production next year as both foreign and domestic demand weaken," the board said yesterday.

As a result, Quebec's output is expected to shrink by 0.4 per cent during 1985, a dismal performance compared with the 3.1-per-cent growth forecast for 1984. -r I. J. JKI HI, 1 4 ww Hp A 2326.01 1198.98 Down 11.44 Down 15.13 PfV 114.83 76.63 $353.75 Down 0.72 Up 0.4 Down 75.