The Toronto Star from Toronto, Ontario, Canada • 87

TORONTO STAR Saturday, November 20, 1999 E3 BUSINESS TODAY Plan to carve up Eatons okayed the vote. Now its on to the real work of repositioning the stores. Unsecured creditors, including employees, were offered 50 cents on the dollar for the $234 million theyre owed. Facing a lower recovery under bankruptcy, voters representing 94.8 per cent of that debt approved the proposal. No surprises there, despite outcries and failed court challenges over the $107 million the U.S.-based liquidators walked away with.

What came as a bit of a shocker was that the landlords, who could have scuttled the plan, unanimously passed it. In the weeks leading up to yesterdays meeting, they all complained that they werent getting enough money $12 million for the 40 or more cancelled leases. The landlords were also up in arms because they thought that the shareholders shouldnt get any money at all. Cadillac Fairview Corp. the largest Eatons landlord, spent a lot of money battling the insolvent retailer in court Peter Sharpe, executive vice-president of Cadillac Fairview, said he called in his legal team to prevent bad law in the Eatons proposal from setting precedents.

Even though Sharpe could have vetoed the Eatons plan with the support of Cambridge Shopping Centres he said the deal was never in jeopardy. The plan, per se, has always had a pretty good prospect for success. Sharpe said last-minute negotiations eliminated the only contentious issue: lease terms at the Toronto Eaton Centre and Vancouvers Pacific Centre. Cadillac Fairview gets back the two-below 9the main floor in the Toronto store, which Sharpe said could bring in $3 million a year in rent. In return, Sears Canada is permitted to use, or sublet, the top four KEN FMJGHtIDRONTD STAR HAPPY WITH RESULT: Ilap Stephen, Eaton's chief financial officer, at yesterdays annual floors in the Toronto store and the top two floors in Vancouver for offices.

This is good for Sears Canada because it didnt want to use all of the space for its department store, which the lease terms would have required. Sharpe also said he is happy to have Sears Canada, under the Eatons banner, as a tenant in Cadillac Fairviews big downtown stores, despite his efforts to attract a big U.S. department store chain. We were not uncomfortable with that at anytime. Shareholders also overwhelmingly approved the deal.

They were offered about 80 cents per share 50 cents in in retirement plan scam meeting in Toronto. Sears furniture store. Discussions continue on a few other sites, so there is a strong possibility we will add to that total by at least two more stores on the Sears side, said Walters. Talks continue for Guilford Town Centre in Surrey, B.C., and Southgate Centre in Edmonton, he added. Hudsons Bay Co.

paid $2.9 million for Eatons leases in Londons Masonville Mall, Mississaugas Square One and Newmarkets Upper Canada Mall, Stephen said. Hudson's Bay says it is negotiating directly with landlords for a bunch more leases abandoned by Eatons. rectory assistance still had no listing. Last night the phone tree for Toronto residents was messed up because a Richmond Hill broker had forwarded calls to his own answering machine. Chieftain has a Web site (www.chieftain.ca) but when I tried the broker locator tool it didnt work.

President George Cooke, contacted during a fund-raiser at a local bowling alley, said his staff is working to clear up the problems. Money Talk appears Tuesday, Thursday and Saturday. James Daw can be reached at Money Talk, Your Business, 1 YongeSt, Toronto ONM5E 1E6; at (416) 945-8633; (416) 865-3630 by fax; or at jdawfaihestar.ca for e-maiL todays dollars. That result was expected because theyd get nothing if the plan failed. Shareholder Alan Brown and his wife, Margaret, came all the way from Montreal to attend the meeting.

"We wanted to see the final demise of Eatons, he said, adding that hes not angry about losing money on his investment. Its always a gamble," Brown said. But I never thought theyd go under. Once Ontario Superior Court Justice James Farley approves the deal on Tuesday, Sears Canada will get the following Six stores to run as Eaton's: Toronto Eaton Centre, Ottawa Rideau Centre, Victoria Eaton scheme in January, but the promoters continued. So the commission obtained a temporary injunction in May and a permanent injunction in June from Quebec Superior Court in order to halt one Diane Letour-neau and Denis Roy.

Dube said this sort of scheme is still being promoted in Quebec, and now apparently in Ontario. So we decided to alert investors that it might be dangerous to participate in this scheme, he said. An official with the Financial Services Commission of Ontario said that for more than a year the province has been considering rules to permit access to locked-in accounts. But action was sidetracked by the election and summer vacation. Sears comes out the winner with stores, shares By Steven Theobald BUSINESS REPORTER Despite all the grumblings from creditors the loudest coming from the landlords the deal to sell Eatons core assets to Sears Canada has been overwhelmingly approved.

Before yesterdays vote, T. Eaton Co. Ltd. chief financial officer Hap Stephen apologized to creditors and shareholders for things ending up they way they did. Given where we were at on Aug.

13, we are happy with the result, said Stephen afterward, referring to the day Federated Department Stores Inc. left him stranded at the altar and walked away from takeover talks. Thats when Sears Canada which had been waiting in the wings with an alternative offer, came knocking. With no other serious contender to compete against, Sears Canadas chief executive, Paul Walters, hammered put a shrewd takeover bid. Hell pay $60 million for 15 Eatons store leases, most featuring lucrative rental rates, outright ownership of a downtown Calgary store and all trademarks and credit card operations.

For another $20 million worth about $12 million in todays dollars because it wont be paid out for at least five years Walters bought all the companys stock. These shares hold tax losses that could add as much as $175 million to Sears Canadas after-tax income over a period of several years. Its a very good deal for Sears shareholders but we are not gloating over this, said Walters when contacted after Beware Scam artists may be on the prowl for individuals desperate to crack their locked-in retirement savings early, say provincial securities watchdogs. An illegal scheme first promoted in Quebec has recently cropped up in at least one Toronto classified advertisement. So Ontario regulators have joined with Quebecs to issue a simultaneous investor alert and uige potential investors to exercise extreme caution.

Rowena McDougall of the Ontario Securities Commission, said she could not supply a copy of any advertisement for the suspicious promotions, but Denis Dub6 of die Quebec Securities Commission read from two examples: Financial assistance. If you have an RRSP, LIRA, LIF or other locked-in accounts, you can have access to your money. Cash right now! RRSP, RRSP locked-in, LIRA (Locked-in Retirement Account), LIF (Life Income Fund) or other locked-in accounts, owners can turn your investments into cash right now without playing taxes. The pitch is mainly to those who have left company pension plans before becoming eligible to retire and who could thus have money tied up in locked-in accounts for years. Quebecers desperate for money can apply to get locked-in money early, and Ontario is thinking of granting the same freedom.

But income taxes would be charged, as is the case when withdrawing funds from an ordinary retirement savings plan. The scam artists are claiming that their clients can extract RRSP cash and avoid income taxes by simply buying shares of certain no-name companies. Once the gullible investor buys the shares, he or she is supposed to get a cash refund or loan. The scheme has al probable problems for the invertors, the securities commissions point out. locked Money Talk James Daw Investors can get cash equal to only 70 or 80 per cent of the supposed value of the shares purchased.

People will have to repay the loan or refund later. In the worst-case scenario, the company may be a worthless hoax. At best, the company is likely to have no track record and an uncertain future. The company may not have been approved to have its shares sold to the public, and the promoters of the scheme may not be licensed to sell securities. In either case, the investor will be vulnerable to shady dealing.

Revenue Canada could challenge the legality of the scheme and demand taxes. McDougall of the Ontario Securities Commission said the type of investor who might be attracted to such a scheme is interested only in quick cash, not a sound investment for retirement. These are not sophisticated people, she said. They are desperate people looking for a way to cash in their RRSP. Dub6 of the Quebec commission said his agency issued a cease and desist order against two promoters of this sort of Centre, Vancouvers Pacific Centre, Winnipegs Polo Park and the Calgary Eaton Centre, which Sears Canada owns.

Sears Canada is still in talks with developer Ivanho Inc. for a site in the former Montreal Eaton Centre. Ten stores to run as Sears: Yoikdale Shopping Centre, Sherway Gardens, Scarborough Town Centre, Westmount Shopping Centre in London, St. Vitale Centre in Winnipeg, Galleries La Capitale in Quebec city, Halifax Shopping Centre, Brentwood Mall in Burnaby, B.C., South Centre Mall in Calgary and half of the Orchard Path store in Kelowna, B.C., which will be turned into a I think there is a perception by this government that locking in is perhaps paternalistic, said the official. Its interfering with the savings of an individual and the government feels it doesnt have a place to do that.

In the meantime, its a good thing Big Brother is comfortable with issuing an investor alert. Chieftain Insurance Co. is having a few teething pains with its system of linking brokers by a single number. The number (1-877-439-2443) has been advertised, but not everyone has noticed. Readers have called me since I wrote about the company two weeks ago.

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