Robert Campeau Sues Olympia & York For $1.02 Billion
TORONTO (AP) _ Robert Campeau, whose international real estate and retailing empire foundered last year, is suing embattled Olympia & York Developments Ltd. for $1.02 billion.
Campeau, who built a small construction company in Ottawa into a real estate and department store powerhouse before losing it all, filed the lawsuit Tuesday in an Ontario court.
He is seeking from Olympia & York and the National Bank of Canada a total of $1 billion Canadian in damages for various wrongs and $250 million Canadian in punitive damages. At current exchange rates, the damages total $1.02 billion.
Campeau and Paul Reichmann, head of the family that owns Olympia & York, were once close business associates. Olympia & York, the world’s largest commercial real estate developer, poured more than $510 million into Campeau Corp. in a failed rescue effort.
″O and Y doesn’t owe Bob Campeau a penny,″ an Olympia & York spokesman said in a statement. ″O and Y attempted to bail him and his companies out of difficulties he created, at a huge cost to O and Y. It will come as no surprise that O and Y will defend vigorously this frivolous action.″
National Bank in Montreal had no immediate comment. Campeau’s spokesman said he was out of the country.
The downfall of the flamboyant Campeau, once the darling of Canadian business, started when he plunged into the American retail market. He acquired Allied Stores in 1986 for $3.6 billion. Two years later, he bought Federated Department Stores, including New York’s Bloomingdale’s and Rich’s of Atlanta, for $6.6 billion.
The $10.2 billion debt was more than Campeau could handle. He filed for bankruptcy protection in the United States in January 1990 and in Canada in October 1991.
Olympia & York, which owns 45 million square feet of some of the world’s finest commercial property, is teetering on the verge of bankruptcy itself. The property developer is struggling to restructure $12.2 billion in debt owed to nearly 100 banks in Canada, the United States and Britain.
The crisis, which Olympia & York maintains is merely a short-term liquidity problem, was caused by a declining real estate market and the cash demands of its half-finished $6 billion Canary Wharf development project in London.
Campeau was ousted from his own company in 1990. He lost control when National Bank seized 13 million shares after he defaulted on $127 million in loans.
A massive restructuring plan approved by a Toronto court allowed Campeau Corp. to exchange debt and stock for shares in a much smaller company called Camdev Corp. Olympia & York ended up owning about 65 percent of Camdev.
Campeau’s suit claims O & Y and National Bank, through directors placed on the Campeau Corp. board, forced various financial moves favorable to them as creditors rather than what was good for Campeau Corp.
Olympia & York’s purchase of Campeau Corp.’s 50 percent interest in downtown Toronto’s Scotia Plaza was a key factors that sparked the suit, Campeau’s public relations agency said in a statement. Olympia & York acquired the interest in October 1991 at an extremely low price.
In January 1990, the release said, a Toronto company offered to buy the entire Scotia Plaza for about $659.6 million. Campeau claims Olympia & York effectively blocked the deal, which would have netted Campeau Corp. $330 million.
Instead, O & Y bought the Campeau Corp. interest in Scotia Plaza in October 1991 for $191.25 million.