LOEWEN
THE RISE: Ray Loewen grew up in Manitoba's Mennonite country, the son of Steinbach's only ambulance-and-funeral-parlour operator. After taking over the family business in the early 1960s, Loewen started buying funeral homes across Canada. In 1987, his Loewen Group went public and entered the U.S. market; within a decade, the Burnaby, B.C.-based company had 15,000 employees at 1,115 funeral homes and 427 cemeteries. Loewen often kicked off board meetings with a prayer, and his preacher's voice helped persuade many small-town operators to sell out to his company.
THE FALL: A lawyer named Willie Gary put the first nail in Loewen's coffin. In 1995, Gary's client, a funeral-home operator in Mississippi, won $500 million (U.S.) in damages in a breach-of-contract suit against Loewen. Loewen Group, which was portrayed in court as a predatory foreign-owned Goliath, eventually settled for $165 million (U.S.). The case by itself didn't wreck Loewen, but it did set off a fatal domino effect. By 1999, the company was on life support--in the first six months of that year, its stock lost 93% of its value. Loewen filed for bankruptcy protection with $2.3 billion (U.S.) in debt on the books. Three years later, the firm emerged from restructuring as Alderwoods Group Inc. In 2006, it was taken over by Texas rival Service Corp. for $856 million (U.S.).
A decade earlier, Service had offered $4.3 billion (U.S.).
Ray Loewen has kept a low profile of late, but you may soon see him--or Hollywood's version, at least--on the big screen. Stephen Frears ( The Queen) has reportedly signed on to direct The Burial, based on a 1999 New Yorker article about the Mississippi court case.
No word yet on who will portray the Canadian interloper.
COREL
THE RISE: At one time, Ottawa-based Corel Corp. was Canada's largest software company and its owner, Michael Cowpland, was a superstar. In the mid-1980s, Cowpland and Terry Matthews had sold their struggling telephone-switching company, Mitel, to British Telecom for $322 million. Cowpland put up $7 million to start Corel, which, after striking out on everything from laser printers to local area networks, launched CorelDraw in 1989. Soon, Corel was shipping 56,000 units of the graphics program a month. To celebrate, Cowpland and his often innovatively clad wife, Marlen, built themselves a gaudy mansion that outraged their Rockcliffe neighbours.
THE FALL: CorelDraw accounted for almost all of Corel's revenue, and despite Cowpland's ingenious marketing, it couldn't keep pace with Adobe's Illustrator program. To bolster Corel's offerings, Cowpland paid $170 million (U.S.) in 1995 for Novell's WordPerfect division. Cowpland's goal: Crush Microsoft Word. (We all know how that turned out.) The company staggered along until 1999, when Cowpland got nailed for insider trading. A year later, he quit Corel.
These days, Cowpland's running Zim Corp., which first focused on mobile messaging but abruptly moved into Internet-based TV last year. Though it trades for pennies, Zim has scored one coup, landing the rights to broadcast pro table tennis (it's Asia's No. 1 sport). As for Corel, it was taken private in 2003 by a U.S. venture capital firm, which spent three years readying the company for an IPO that raised around $80 million (at its peak, Corel was worth $1.7 billion). The firm is now marketing CorelDraw and WordPerfect as low-cost alternatives to the better-known brands. Corel's CEO--an IBM veteran--has none of Cowpland's flair. Shareholders have no problem with that.
360NETWORKS
THE RISE: Cliff and Dave Lede's Alberta construction company, Ledcor, started laying fibre optic cables for Bell and other telcos in the mid-1990s. Before long, they realized it would be simpler to build one continuous line from coast to coast, preselling capacity to defray the costs. Bandwidth-hungry carriers threw money at the project. When investors bought 20% of the newly created Worldwide Fiber Inc. for $345 million (U.S.) in 1999, the company's valuation hit $2.5 billion. Worldwide owned a network that stretched across Canada and into the U.S., and had started laying a $1.25-billion undersea line to Europe, with a Pacific project in the works.
THE FALL: Though the margins on laying fibre were huge, Worldwide wanted more: Why not actually transmit data on behalf of other companies? That decision put Worldwide in direct competition with the likes of Global Crossing and AT&T, and forced it to take on $2.5 billion in debt to fund the battle.
In January, 1999--around the time Greg Maffei, former CFO of Microsoft, took over as CEO, making the company gold-plated--Worldwide announced it would go public in a $1-billion IPO. Then the market crashed. The newly rebranded 360networks went ahead with a scaled-down offering and, despite the crash, ended up raising $2.4 billion. In September, 2000, the stock came close to hitting $36.
Then came the reality check: 360 was being crushed by debt, and revenues plunged thanks to an industry-wide bandwidth glut. In June, 2001, it filed for creditor protection amid billions in writedowns. Its stock was trading at 46 cents. (Rivals WorldCom, Global Crossing and Teleglobe also soon collapsed.) When 360 emerged from protection the following October, shareholders got nothing.
The company limped along until mid-2004, when Bell Canada bought its Canadian operations--which included GT Group Telecom, bought by 360 the year before--for a mere $275 million. Maffei took a job as CFO at Oracle, but left after five months. These days, 360 is still in business in the western U.S. And Maffei, now CEO of Liberty Media Corp., is back as chairman. As for the Ledes, they're still running Ledcor and have a net worth of more than $600 million.
CINAR
THE RISE: Micheline Charest and Ronald Weinberg were hailed as geniuses for producing non-violent children's programming like Arthur. By 1999, their firm, Montreal-based Cinar, had $150 million in revenue and had started buying educational suppliers, aiming to slip its characters onto flash cards and other school-bound materials. Along the way, Charest beat out Madonna and Barbra Streisand on The Hollywood Reporter's list of the most powerful women in show biz, coming in at No. 19.
THE FALL: By 1999, analysts were warning that Cinar's stock (which hit $60-plus) was overpriced. Then came the scandals. Cinar, keen to protect tax credits, had been slapping Canadian names on scripts written by Americans. And in 2000, Cinar's audit committee discovered that $122 million (U.S.) had been invested in Bahamian banks behind the board's back. Quebec's securities commission fined Weinberg and Charest $1 million each and banned them from serving as directors or officers of a publicly traded Canadian company for five years. The stock tanked.
For the next two years, a battle raged between an investor, U.S. fund manager Robert Chapman, who wanted the company to be sold, and the founders' trustee, who wanted to revive it. Chapman won. Late in 2003, a group led by Michael Hirsh, co-founder of Cinar's old rival Nelvana, bought Cinar for $190 million (at its peak, it was worth $1.5 billion). Hirsh's plan for the rechristened Cookie Jar Group was to create an "edutainment" force to rival Disney. The closest Hirsh came was producing one bona-fide hit, The Doodlebops. By last year, Hirsh was talking IPO. But the plan fizzled. The latest word is that Cookie Jar is looking for a cash infusion.
The founders' story took a tragic turn: Charest died in 2004 following plastic surgery. Her death was ruled accidental, though the coroner condemned clinic staff for waiting 35 minutes after Charest stopped breathing to call an ambulance. Weinberg moved to Florida, and continues to sue and be sued over the Cinar debacle. Norshield Asset Management, a hedge fund involved in the Bahamas investment, filed for bankruptcy protection in 2005 and is being investigated for alleged fraud.
LAIDLAW
THE RISE: Michael DeGroote bought Laidlaw Transport Ltd. in 1959 for $75,000. Over the next 30 years, he amassed fleets of garbage trucks and school buses, buying out hundreds of small players across North America. Under his leadership, Laidlaw Inc. generated steady profits and returns. Canadian Pacific took control in 1988, and in 1990 the fabulously wealthy DeGroote quit, settling on a private Bermudan island.
THE FALL: New CEO Jim Bullock had promised to hit $5 billion in revenue by 2000, and dump trucks and school buses weren't going to get him there.
In the late 1990s, he spent well over $1 billion for the Greyhound bus lines. Then there was the strategic shift from garbage to...toxic garbage. Bullock sold off the garbage-disposal unit to get into hazardous waste, with the $2-billion hostile takeover of South Carolina-based Safety-Kleen Corp. Bullock also added a bunch of ambulance and emergency-room management companies--for another $2.6 billion. But Safety-Kleen proved to be toxic indeed. Hit with an industry slowdown and massive accounting irregularities, it filed for bankruptcy protection in 2000. Laidlaw soon followed. Class-action lawsuits poured in, alleging that Laidlaw had fixed the books. When the company emerged from protection two years later, as U.S.-based Laidlaw International Inc., it went right back to the boring business of shuttling schoolchildren. Shareholders in the old company got zip. The now-profitable Laidlaw was bought this year by Scotland's FirstGroup PLC for $3.6 billion (U.S.).
As for DeGroote, in 1993 he and some associates made a record $23-million settlement with the Ontario Securities Commission for insider trading in Laidlaw shares. DeGroote denied any wrongdoing; his name still graces the business school at McMaster University.
JDS UNIPHASE
THE RISE: By 1999, Jozef Straus, co-founder and CEO of JDS Fitel Inc., was already a darling of Ottawa's booming tech sector. After Fitel's $4.7-billion merger with Uniphase Corp. of Silicon Valley, the beret-topped physicist became a genuine hero.
Within a year, JDS Uniphase, which made equipment to boost the capacity of fibre optic cable, had consumed two U.S. rivals for a combined $33 billion (U.S.) in stock. JDS's shares hit $153 (U.S.) in 2000; thus the firm temporarily surpassed Royal Bank in market capitalization. At its peak, JDS had 10,000 employees in Ottawa and another 20,000 south of the border.
THE FALL: Even after its share price had been slashed in half--thanks in part to the woes of Nortel, its second-largest customer--analysts continued to swoon over JDS. But in fiscal 2001, with the tech sector in free fall, the company posted a loss of $56 billion. That year, Straus exercised stock options worth as much as $150 million (U.S.). Over the next couple of years, JDS moved more of its operations to California, and by the time Straus quit in August, 2003, there was just a smattering of JDS employees left in Ottawa. Straus is still in town, however, and is an adviser to at least one small tech firm, Enablence Technologies. JDS's spectacular HQ was purchased last year by none other than the RCMP.
As for the company, it's still losing money--$14 million (U.S.) in the latest quarter on revenue of $316 million (U.S.). But with bandwidth appetites growing, its all-fibre diet may ultimately restore JDS to health.
724 Solutions
THE RISE: The market's embrace of 724 Solutions Inc. was as torrid and brief as an office affair. The Toronto-based company's software was going to revolutionize e-commerce, allowing people to make secure bank transactions on their cellphones and other handheld devices. Of course, all this was very far off--but what did that matter? On their first day of trading in early 2000, the company's shares closed at $103.30, valuing the money-losing company at $3.6 billion and co-founder Greg Wolfond's stake at more than $820 million. Market cap soon soared to $11 billion.
THE FALL: By January, 2002, Wolfond had surrendered the corner office, and 724 had dumped most of its 700 staff. In 2006, with the stock trading at about $3.50, the company was acquired by California-based Austin Ventures. The 724 website now talks a lot about "solutions," "scalability" and "content delivery," but not a lot about how the heck people are actually using its revolutionary software. After all, when was the last time you paid a bill on your cell?
Dawn Calleja