Quebecor Inc. chief Pierre Karl Péladeau said yesterday the company made full disclosure of looming senior executive departures at subsidiary Quebecor World Inc. when a share offering was discussed with investment brokers last week.
The issue of who knew, and when, about the changes at commercial printing giant Quebecor World continues to hang over the bought deal with TD Securities Inc., a unit of Toronto-Dominion Bank.
Lead underwriter TD Securities was told last Thursday evening, when it approached Quebecor about the offering, about the retirement of Quebecor World chief executive officer Charles Cavell and the departure of chief financial officer Christian Paupe, Mr. Péladeau told The Globe and Mail yesterday.
Four other firms - Bank of Nova Scotia, Canadian Imperial Bank of Commerce, RBC Dominion Securities Inc. and BMO Nesbitt Burns Inc. - were also told of the executive changes at a due diligence meeting the following day, Mr. Péladeau said.
"It was important for us to answer questions" sparked by word on the street that Mr. Cavell was planning his departure and everyone was satisfied with the answers, including lawyers for TD and the other firms, he added yesterday.
"We took the precautions so that the investment bankers were apprised of the situation of this orderly and efficient transition period."
Late Monday, Montreal-based Quebecor and TD repriced at a lower value the Quebecor World offering after bitter reaction from investors, including the powerful Ontario Teachers Pension Plan Board, which said it was cancelling its order for an undisclosed amount of Quebecor World shares after alleging lack of proper disclosure.
Yesterday, a spokeswoman for Teachers told Canadian Press the fund may file a formal complaint with securities regulators over the timing of Quebecor Inc.'s disclosure about two top-level resignations from its commercial printing subsidiary.
"We're considering pursuing it with the [Ontario Securities Commission]" Lee Fullerton said.
Quebecor World shares fell almost 9 per cent Monday on the Toronto Stock Exchange, while Quebecor stock dropped more than 12 per cent. Quebecor Inc. class B shares closed down 75 cents at $15.09 yesterday on the TSE yesterday. Quebecor World shares ended down $1.12 to $34.70.
TD Securities spokesman Michael Sherman said yesterday securities laws prohibit a firm from making any comments when a deal is in the process of being distributed.
But dealer sources said yesterday that plans to announce the departures of Mr. Cavell and Mr. Paupe at next year's Quebecor World annual meeting were brought up on Thursday by Quebecor and but it was decided the change was not material.
However, when all of the bankers - about 20 people - talked to Mr. Cavell and Mr. Paupe for the first time the next day and it became clear the CFO was leaving sooner rather than later, everyone changed their minds and decided it was material, the sources said. Quebecor World issued a press release on the executive changes Monday morning before the markets opened.
Mr. Péladeau said TD Securities' offer to do the bought deal was too good to pass up, even though Quebecor CFO Claude Helie told analysts in a recent conference call that a secondary offering of Quebecor World stock would likely not be necessary as a way to finance impending debt obligations at subsidiary Quebecor Media Inc.
Mr. Péladeau defended the decision to once more go to the Quebecor World well - a secondary offering of Quebecor World stock was made last year - and dismissed criticism from some analysts that Quebecor is diluting its stake in its most precious asset because of the monstrous $3.66-billion debt to be paid down at Quebecor Media.
"There would be no development of Quebecor World as the disciplined, rigorous organization that it is without Quebecor backing it," he said. He pointed out that he played a key role as a young man in building Quebecor World through acquisitions after his father, Pierre Péladeau, decided to diversify his newspaper company into the printing business.
"The implication of Quebecor in Quebecor World is fundamental," Pierre Karl Péladeau said.
The Péladeau family controls Quebecor, which in turn has a controlling stake in Quebecor World.
Ownership of Quebecor Media - whose assets include the Sun Media Corp. newspaper chain is about evenly split between Quebecor and the province's giant public pension fund manager, Caisse de dépôt et placement du Québec.
He also dismissed criticism that the dual-class share structure at Quebecor is unfair to minority shareholders because the family controls a majority of the voting shares - which are not diluted by the sale of Quebecor World stock - but only about 24 per cent of the common equity.
"We're not forcing anyone to buy shares," he said.
Asked about growing concerns that his many battles - including Quebecor Media subsidiary Vidéotron Ltée leading the charge against satellite-television rival Bell ExpressVu for allegedly unfair competitive practices - and the perception he is losing many of them, he said that is of no concern to him.
"I'm not paid to be popular. I'm not a politician who is looking to get elected," he said flatly.
He also addressed the matter of the slew of executive departures from Quebecor and many of its units, acknowledging that many have left but saying that's normal given the upheaval over the past few years as Quebecor struggled to deal with the fallout from the economic slump and stock-market meltdown.
The drawn-out strike-lockout of unionized technicians at Vidéotron is one example of a difficult situation that has to be dealt with and not just swept under the rug, he said.