The Gazette from Montreal, Quebec, Canada • 21

M.ui.iii hum lill.llll llll.lMHt II IM.IMII1 THEY closed lili Jim mmi lai 1826.31 3439.75 UP 11.83 UP 21 .37 rr DOW GOLD DOLLAR .3324.08 $348.30 83.96 'UP 30 8 UP 70 UNCHANGED 1 mot Stocks in New York rally Stock prices in New York surged yesterday, while Canadian markets went along for the ride. North American stocks received a boost from overseas markets, which were, strong overnight. The Nikkei index in the battered Japanese market climbed 1 .5 per cent. PAGE B7 Montreal-based mortgage lender fails to work out rescue plan with hanks demise on "depressed real-estate markets worldwide" and recent failures by large developers. RONALD LEBEL THE GAZETTE Bank rate drops to 5.66 OTTAWA The Bank of Canada rate was set at 5.66 per cent yesterday, down from 5.73 per cent last week.

It was the 10th consecutive weekly decline. The drop wasn't enough for the most major banks to lower their prime rate, -currently at 7 per cent. The Bank of Montreal lowered its prime to 6.75 per cent last week. Lawyers for Berliner Handels-und Frankfurter Bank intervened in support of Pacific Plaza's action recently. They charged that Castor's business affairs "have been neglected by the debtor" virtually since Feb.

26, when it won a four-month reprieve under the Companies' Creditors Arrangenent Act. Wolfgang Stolzenberg, Castor's German-born chairman and president, has been touring Europe in recent weeks to meet major creditors and shareholders, company lawyer Neil Stein said. Stein said more time was needed to reorganize the firm's complex finances, but the Berliner Bank refused to grant an extension. A creditors' committee dominated by German and Swiss banks was "driven" by Berliner, whose North American operations are based in New York. Canadian banks have very little exposure to Castor's collapse because all their loans were secured, Stein added.

Castor invested heavily in real-estate projects in Montreal, Toronto and the U.S. in recent years, then got caught in a wave of defaults. The firm blamed its Castor had offshore subsidiaries in Ireland, Cyprus and the Dutch Antilles, which borrowed hundreds of millions from international banks and invested in mortgages and short-term business loans. A dozen banks based in Europe, Japan, the U.S., Australia and Israel have won Quebec court judgrpents allowing them to foreclose Castor loans and eventually seize assets pledged as security. The accounting firm of Richter Associates'Svas named bankruptcy trustee at the request of the Berliner Bank.

Yves Vincent, a Richter partner, said he plans to call a creditors' meeting within three weeks and to submit a report on Castor's finances at that time. Stein said Castor estimates its debts in Canada afoiie at about S800 million. A syndicate led by the Bank of Montreal is owed about $125 million by the developers of the Eaton Centre in downtown Montreal. Castor financed about half the centre's total cost of $300 million. The banks took over the mall on March 4.

One of the largest bankruptcies in Canadian history was declared yesterday when a little-known investment firm collapsed under a worldwide debt load of $1.5 billion. Castor Holdings a Montreal-based mortgage lender controlled by European interests, threw in the towel at a brief court hearing after failing to work out a rescue plan with its bankers. The secretive company, most of whose directors and executives have resigned, had been operating under temporary court protection from its creditors for over four months, trying vainly to raise fresh capital in Germany and Switzerland. Castor folded at a Quebec Superior Court hearing yesterdav when it did not contest a bankruptcy petition filed by Pacific Plaza an Edmonton-based firm with a relatively small claim of $207,666. But the fatal blow came from a German bank that was owed about S60 million, court documents showed.

gets more time to regroup TORONTO An Ontario judge agreed yesterday to givaClympia York Developments Ltd. another six weeks to come up with a plan to restructure $8.6 billion in debt. was to have a plan ready by Monday, but its lawyer said company officials haven had enough time to nRnntiatp with nmrlifnrs. The new deadline is Aua. 21.

mm Stephen Sharpe said the company had been diverted by I inline mm tCTz1 eno hv cour room wrananna over now restructurina exDenses. like leaal fees, would be Top court upholds law against price-fixing 111 financed. Lawyers for some creditors complained DUIDR1 had asked for too much time, especially since it has been working on a reorganization plan since April. was granted protection from lenders under the companies Creditors Arrangements Act on May 14. Dofasco sells lime operations STEPHEN BINDMAN S0UTHAM NEWS HA'MILTON Dofasco Inc.

said it has signed an agreement to sell its lime and limestone operations near ft sTT 1 St 1 OTTAWA The heart of Canada's competition law has been given a clean bill of constitutional health by' the Supreme Court of Canada. In a unanimous ruling yesterday, the top court said the conspiracy sections of the Competition Act do not violate the Charter of Rights and Freedoms. The judgment clears the way for prosecution of 12 Nova Scotia pharmaceutical groups and drugstore chains charged in 1 s40 with price-fixing. It is the third ruling in the past month lavoring the federal competition watchdog. his is the most important anti-trust decision in Canada in many years." said a jubilant Howard of the Bureau of Competition Policy.

"It is an extremely important decision that will allow us to proceed with removing impediments to competition in. the Canadian marketplace. I think it's very essential that consumers be protected by ingerson, unt. me steelmaker saia its wnony ownea subsidiary, BeachviLime will be sold to the Calcitherm Group, a holding company based in the Netherlands with limestone quarrying facilities in Belgium, France, Spain, Italy and Turkey. The sale is expected to close over the next few months, Dofasco said in a statement.

Terms of the deal were not disclosed. Cott buys U.S. soda-maker ROCHESTER, N.Y. Curtice Burns Foods Inc. is selling its soda-manufacturing operation in Oakfield, N.Y., to Cot) Corp.

of Laval and getting out of the soft-drink business, the company announced. Cott makes and bottles sodas that are sold by supermarkets under their own brand names. Terms of the sale were not disclosed. The plant's 52 employees are not expected to be affected by the sale. Sale of enRoute completed Air Canada said it has completed the sale of its enRoute credit-card business to Citibank Canada, as agreed in March.

Of enRoute's $300 million in assets, Air Canada said it has realized about 85 per cent from the Citibank sale. The Dorval-based airline said it expects to realize the balance by collecting the remaining accounts over the next several months. The card will now be operated by Citibank's Diners Club Canada division. Air Canada and Diners Club have agreed to jointly promote the two cards as well as the airline. 4 (MJ 5 OVbllt.

ILOUCHUHW The Aubaines store in Place Alexis Nihon holds a liquidation sale in preparation for its closing, possibly next month. iVl Stores chain winds down operations a sirong anii-irusi law and I think this decision is extremely consumer-welfare oriented in ensuring that the public interest in competition is maintained in Canada." The Nova Scotia case was halted in 1990, when a trial judge ruled the conspiracy section of the Competition Act is unfairly vague. I 4 1 tm il ill nil A. Wetston CRAIG TOOMEY THE GAZETTE As shoppers shuffled through the doomed Aubaines general-merchandise store in Place Alexis Nihon yesterday, its youthful manager was lending oil' a barrage of criticism from a client ho was refused an exchange. "I suggest, sir.

that you better educate uur employees." said the woman angrily after complaining she had been misinformed about the store's refund policy. A nearby cashier stopped punching in a sale and, almost screaming, told he woman in no uncertain terms to mind her own business. by David Waisglass Gordon Coulthart I lie act say it is illegal lor companies lo conspire to duly" lessen competition. un- has been reduced to a skeleton. The dismantling of the Stores chain, once a leading Quebec discount retailer, started on June 5 when the company made a liquidating proposal under the Bankruptcy Act.

It took the move after two creditors sought to force it into immediate bankruptcy. Stores, a perennial money loser, owes about S25 million to Steinberg which for years tried lo turn its fortunes around. In preliminary court filings, it said it also owed 500 suppliers more than $7 million. Steinberg is also being dismantled after obtaining protection from its creditors under the ompanies' Creditors Arrangement Act. he majority of the 107 Quebec supermarkets it sold to Provigo Metro-Kichelieu Inc.

and a unit of Oshawa Group have been transferred under a deal reached in May he Stores clearance sale, ordered by trustee Samson. Bclair. started last week and is aimed at raising money to pay oll'the creditors. They are scheduled lo obtain more information at a meeting July 27. But sccral suppliers lo Stores said I hey don't expect to recoup a penny from the company.

"The bottom line is, it's a writeoff." said one supplier, who didn't want to be named. I low ever, another creditor representa tive said intense negotiations are continuing with Stores and it's possible there could be some recovery. Spokesmen for Stores and its trustees didn't return repeated telephone calls to discuss how the liquidation sale is But if Aubaines is any indication, business is slow. "I'm nut impressed with the prices." said one dissatisfied shopper during lunch hour yesterday. I ew items were marked dow by the maximum udertiscd 50 percent.

Other products were strewn on the floor and. apart from cashiers, there were no employees in sight. Effort to save some stores Michel Brunei, president of local 502 of the United Food and Commercial Workers Union, which represents Store employees, said efforts are continuing lo try lo salvage part of the chain and save jobs. The union has set up a special com- i mill ec ith the Quebec Federation of Labor's I onds de Solidarity and other 1 groups lo study the possibility of turning some of the Stores sites into retailers of mainly Quebec-made products. But Unmet said the union has vet lo find the S2MUHH) it needs lo conduct a feasibility study into the proposal.

i 1 Part of Steinberg empire Aubaines is pari of the Stores Inc. retail chain owned hv the rapidly disintegrating Steinberg Inc. empire. I lV. I I And it is not happy place.

he store and 15 other outlets in the 5r chain are holding liquidation sales in preparation lor their closing, possibly as early as next month. Three additional Mores, located in Ottawa, Mull and Sorcl. were closed on Mondav. At least 200 ol Slores's 1.200 union ized cmplovees have lost their jobs in the last few weeks, according to their union. "Do you ever wonder what they put In these things?" nd the company Montreal head oil ice Central to economic policy Yesterday.

Mr. Justice Charles (ionthier said that while the word 'tun-duly" doesn't have a precise technical definition, it has a "common meaning" that meets the requirements of the harter's principles of fundamental justice. The court ruled that the Competition Act. as a central part of Canadian economic policy, rests on a presumption that any thing preventing competition is not in the public interest. Had the Crown not won yesterday's judgment, Wetston said, Ihe powers of the 7-year-old Competition Act would have been seriously weakened.

The competition bureau was rcorgj-nied to enhance its powers in 1 The federal competition watchdog charged the Nova Scotia Pharmaceutical Society. Ihe Pharmacy Association ol Nova Scotia and 10 drugstore chains and pharmacists xv ith reducing competition by fixing the prices members could charge between 1974 and 9S(. Wetston said the case will go to trial this year. Quebec case to proceed similar case in Quebec will proceed. In December 1990.

a Quebec Superior Court judge threw out pi ice-fixing ch.iiges against 17 drugstore chains and the provincial pharmacists' association because of the vagueness ol the conspiracy seel ion. Although the case was appealed. 'it was put on hold pending the Supreme Court ruling i- I a-t month, the hih court said the competition tribunal has the power to punish a company thai tdiises lo comply with its oiilers. I asi week, it refused hear a Quebec me.il-reiulciing company's challenge to the tribunal's constitutionality. IM i'DKlifii, (IV I' Business encouraged by Bourassa's response to constitution news Bacon, who was somewhat more openly positive about the package than Bourassa himself, "I think there will be a deal because all the provinces need il.

the federal government needs il and business certainly needs it." said Decary. "If there is no deal, we're all si tick with 10 years al least of wrangling over a national divorce settlement." "I feel confident that an agreement is within reach." said Claude Ueauchainp. president of the Regioupcment I conomie et Constitution, a group representing more than (KM) Quebec business leaders. On a related issue, the constitutional package's proposal to limit trade barriers among provinces looks like a step lor-ward, "but it's small step and a tentative one." said Stephen Van llouU n. president ol Ihe anadian Manufacturers' Association.

Van I loiitcn s.ud lie had too few details to make a final assessment, bui the pronsal oil trade barriers appears to have many exceptions and il isn't clear how elleclively il would be enlorced by a pioposed tribunal. On the question of Quebec's return lo Ihe constitutional negotiating table. Beaiich.iinp said he believes two significant issues must be set I led heloie Bourassa will agree. The first possible stumbling bloek is Quebec's designation as a distinct society, which Iteauchanip believes miisi be clearly set out in the body of the constitution something Iteauchanip believes is not envisioned in the current package. I he second is the question of how to protect Quebec's relative power in confederation if new provinces should be admitted.

Dulour mentioned no such stumbling blocks, noting thai Bourassa had said simply that he couldn't comment on any return lo negotiations bcfoie he invited, (iiven this wording, Dulour said. Bourassa clearly would like to resume his position at the table as soon as he gets an iiivj. tation. Bourassa noted thai he has continued concerns about the devolution of power to the equal lepresenlalion tif provinces in Ihe Senate and the possibility thai ahoi initial claims could undermine Quebec's claim to some ol its territory, and both Dulour and Ueauchainp echoed these concerns. "But if we can seltle these things, we can have an excellent agreement." Dulour said.

Hlijh cost ot Qochcc srp.untlon. f'Adl B7 JAY BRYAN THE GAZETTE Reading between the lines ol Premier Robert BourasM's response yesierday to the new constitutional package. Quebec business leaders found a strongly positive rcsmsc hiding behind the bland, vauiious sly le. I hey said their own reaction lo the tentative deal is also positive. Given Bourassa's "positive and constructive" response to the package, "we should all be optimistic." about an eventual constitutional settlement, said Ghislain Dulour.

president of the Conseil du I'alronat. which represents most of big cmployeis. Hoiuassa didn't reject any element in the package out-rinht, which was cncouuyiiiK. and he didn't reject the idea ol returning to the constitutional ncyotialim! table, which was also said Michel Decary of Hie Canadian I cderaliuii of Independent Business, which represents smaller companies, "My own reaction is that llourassa went about as far as lie could go." jiiven strong opposition from nationalists, said Decary. He said Boiirass.i reinforced the ntcssjpv indirect lv through senior mniislcis like Deputy Piemier I ise.