vase 10, The

- VANCOUVER (CP) —
‘MacMillan Bloedel Ltd.
‘directors have dismissed a
‘second major bid in two
-yeara for controlling interest
4m the province's largest
‘forest company.

_ The bid by B.C. Resources
Investment Corp. to pur-
chase 6.2 million shares at
$46 doesn't reflect the true
value of the shares, directors
said Monday in advising
shareholders lo reject the
offer.

| Bruce Howe, BCRIC presi-
gent, said the corporation
has no intention of changing
its offer, which he said

Herald, Tuesday, March 24, 1981

-MacBlio. rejects BCRIC’s S second bid for control

compares favorably with
recent bids involving eastern
Canadian companies.
Calvert Knudsen, MB's
chairman and chief
executive officer, said the
company received advice
from two independent in-
veatment dealers — Wood
Gundy Ltd. and .McLeod,

Young and Weir — con-.

eluding the offer for an
additional 29 per cent of the
company’s stock wasn't high
enough.

B.C. Resources, formerly
a B.C. Crown corporation
that went public in 1979,
already owns 20 per cent of

$3 Tickets

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Tuesday, April 7th
Oddfellows Hall on Munroe

7:30 p.m.

Sponsored by House of Praise
For further information call

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Sr. Citlzens $2

MacMillan Bloedel, plus
interests in other forest

companies, 10 per cent: of -

Westcoast Transmission and
various gas ‘and oi] rights.

Knudsen said in a news re-
lease the $46 offer doesn't
properly reflect the value of
MacBlo's underlying assets
or what he described as the
company's excellent
prospects for future earnings
and cash flow.

He said one well-respected
analyst says the company’s
timber position in B.C. alone.
is worth $70 a share. He said
MB directors and officers
won't tender their shares to
B.C, Resources.

Knudsen said the proposed
offer of $48 represents orily
nine times the company's

1980 earnings. Shares . of
comparable companies in.
the United States sell for 12

to,14 times 1880 earnings.

. “The board belleves that

MB has the potential to more
than double its Garnings and
cash’ flow during. the next ,
five years,” -the directors

~ said, adding that. well-.

qualified analysts | predict .

_ earnings in 1984 will Increase

from $12 to $14 a share.

Howe,
president

former MacBlo
and chief,

executive officer before’

moving to B,C, Resources in
October, disagreed, saying
the #46 offer was the highest
ever,

"Tt should be pointed out
that less than a year ago the

‘shares sald at a price as low

as $24: 25, and only 10 trading
days before our

* $34.25,"" Howe said in a news
release, .-

Howe aiso diagreed with
Knudsen's contentiory that
the share, offer. was low
compared. with the share-
earnings ratio’ common to
other major North American
forest ‘products companies,

“The-price of $46 is nine
times 1980 earnings, which.
compares favorably with the
recent successful bid for
Abitibi-Price by Olympia’
and York at eight times 1960
earnings,” he said,

“We believe it is in-
appropriate to apply price-

earnings multiples of U.S,

coenpantes to a Canadian
; company.” ™

ane. -
, Houncement the. price was

--Howe also said, MacMillan

common’ shares was

reflected in two reeent

convertible preferred-share
issues. -

The September, 1980, issue
‘ was’ convertible into com-
mon shares at $38.50 for five *

years, and at $40.50 for an
additional five years, he
ssid. The January, 1981,

issue is convertible at $45 for.
” five years and $49 dollars for
-pholher, five yeara.’ '

"Howe. urged. MacWillan
Bloedel shareholders to .

“consult their financial
advisers and brokers using
more realistic assumptions”

TRO URS A Pie Ras EMAL Bat gf ances 7 AMER NAS

than those on n which the MB
- bdard based its statement

Monday,

‘Howe ‘and B.C. Resources
chairman David Helliwell

-Bioedel's awn estimate of
future*market values of its

‘are both on MacMillan’s’
“board of directors but didn't.

take part in the meeting
Monday... ; :

“ MB empliys about 24,500
people in activities ranging
from logging, lumber and
reforestation to pulp, paper
and packaging production. It
reported sales of more than
92.1 billion‘and consolidated

“net earnings of $154.9 million

“in 1

B.C. Resources attempt to
gain control of MacMillan
Bloedel is the second major

bid ti two ‘years. Domtar ;
Inc. and Canadian Pacific
Investments, both of Mon: .
treal, carried out a bidding
war for control.in January,
1979. The companies with-
drew their offers after Pre-

mier Bil] Bennett intervened -

saying he didn't want the

province's largest company

being controlled by Eastern.
Canadian interests.

‘B.C. Resources turned

public “in an unusual

distribution of five free

shares to every eligible

resident in B.C, in 1079,”
Blocks of 100 shares were

algo made available for sale

at a book value of $6 each.

"The stock closed at $5%

Monday on the Vancouver

Stock Exchange.

Massey-Ferguson asks workers to reduce pay

Massey-Ferguson Ltd. of
Toronto has asked its hourly
workers in the United States
to accept a 10-per-cent pay
‘cut through October to ‘help
the company reduce cosis.

Peter Lowry, public
relations manager, con-
firmed the request was made
Friday in Detroit to leaders
of the United Auto Workers

union. About two weeks ago,-

a similar request to union
officials in Canada was
turned down.

In February, Massey-
Ferguson received approval
for $200 million in guaran-
tees from the Canadian and
Ontario governments for a
new share issue as part of its

$720-million refinancing plan _

to ease its worldwide burden.
of debt. Formal signing of
agreements with bankers
and governments will not be
completed until mid-May,
Lowry said.

The proposed pay cuts °
would cover the remainder
of Massey's fiscal year
which ends Oct. 41.

In the U.S., the farm

equipment manufacturer
now employs 1,350 hourly
paid workers out of a normal
work force of 2,250. Total

“number of salaried em-
-ployees in.the U.S. is about

2,800.
Lowry said the US.
proposat has not been

‘completed and it will be two

or three weeks before the

union responds.

In another development:
The tax man is , cracking
down on an expanding class
of high-income tax evaders

_in Alberta, such as the
corporate executive earning
$40,000 or more a year and

using a tax sheller called the
personal service cor-

poration. .

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That's a legitimate corpo-
ration when it's used by an
independent . professional
such as architect, doctor,
accountant or lawyer, says
George Milchell, chief of
audil at Revenue Canada’s
Edmonton office. But the
executive tax evader is using
it illegally to collect his
salary.

Mitchell said his office,

which audits income-tax -

returns in northern Alberta,
believes there are at least
600 executives using the
personal service corpo-
ration. He said the office
knows of about 200 such
executives and anticipates
two to three times that
number remain to be un-
covered, ;

Mitchell said the executive
hides his employee status by
calling his salary a fee. He

- then pays a lower corporate

tax rate than he would have
paid as an employee because
small, | Canadian-owned
private corporations are
taxed at lower rates than
individuais in high tax
brackets. —~

Mitchell said if offenders
turn themselves in, charges
won't be laid in most cases,
and they will be asked to‘pay
the unpaid taxes plus. in-
terest. Otherwise,
breaking taxpayers can face

* fines on top of taxes owed as

well as possible jail terms, —
In other developments:
—The annual growth in
energy consumption could be
reduced to zero through a
combination of higher

law- .

energy prices and effective —

government conservation
programs, says the author of
a new book.

David Brooks, who wrate
Zero Energy Growth for
Canada, says federal,
provincial and: municipal
governments should im-
Plement policies aimed at
ensuring the annual rate of.
energy consumption does not
increase, It says gov-
eraments and industry have
concentrated for too long on

_inereasing energy supplies:

rather than

demand,

—Braascan Ltd. of Toronto
has agreed to buy 3.65

reducing |

million newly-lssued com-. .

mon shares of Scott Paper
€o. of Philadelphia, in-
creasing its ownership to 20.5 °
per cent from 13 per cent,

The purchase, worth $102.2.

million {U.S.) or $24. hare, ,
‘will give Brascan a holding -
of almost 6.73 million shares

of Scott, -an international
manufacturer. of paper

products, -
previously bought about five

Tnillion shares on the open’

market.
, Imperial Oil Ltd. of

Brascan had.

Toronto says in its annual”

report its net income for’
1980, if adjusted for the ef.

’ fects of inflation, would be,
about one-third of the:

‘reported amount. Canada's

largest oil company reported »
‘earlier its earnings before -

extraordinary items rose to”.

$601 million or $4.15 a share

from $471 million or $3.61 a- ,

share in 1979. After an $81-—

"million gain resulting from:

the Alberta Petroleum
decision to buy crude oil at.

the wellhead produced by the,

company on Crown leases,
net Income was $682 million.

Marketing Commission's:

lesan oe ae