Groupe Sélection in financial difficulty | The founder’s luxurious lifestyle pointed out

Groupe Sélection lenders accuse the operator of residences for the elderly (RPA) of financing the luxurious lifestyle of the family of founding president Réal Bouclin. Rather than repay his debts, they denounce, the businessman continues to travel by private jet and spoil his loved ones.

Andre Dubuc
The Press

Julien Arsenault
The Press

In addition to offending its bankers, Selection is also in default of payment with respect to its partner Fonds de solidarité FTQ, with whom it is teaming up on two major projects.

One of the Quebec leaders in housing for the elderly has benefited since Monday from the protection of the Companies Creditors Arrangement Act (CCAA). Residents have nothing to fear from this “financial restructuring”. This process will have “no impact” on the activities of the real estate complexes, assures the company in a press release.

The procedure being debated before the court lifts the veil on a stormy relationship between the company and its bankers.

” He [Réal Bouclin] has used Selection Group cash over the years to finance a lavish lifestyle as well as to make payments totaling millions of dollars in bonuses to executives, for services rendered to the Company by entities controlled by members of his family and for unnecessary expenses such as the use of a private jet”, denounce the lenders, in a request whose The Press got a copy.

According to the document, payments to Mr. Bouclin’s family and expenses associated with the private jet have, at times, amounted to monthly expenses of approximately $1.5 million and $190,000, respectively.

For Selection, it is the “increased pressure” from bankers for a loan of 260 million which poses the main problem, according to his request. The banking syndicate is made up of National Bank, CIBC, Desjardins, TD Bank, BMO, HSBC, Briva Finance and Fiera.

The market value of the buildings of Sélection is estimated by the latter at more than 3 billion and the value of the assets held in these assets is calculated at 1.3 billion. The company’s share is estimated at approximately 410 million.

Battle for control of society

Now that it is safe from its creditors, Sélection does not agree with its lenders on the sequence of events. The control of the company is at stake. Superior Court judge Michel Pinsonnault will hear the parties on Tuesday.

Sélection argues that its liquidity problems are temporary, stemming from the COVID-19 pandemic, inflation and rising interest rates. She asks the court to accept her recovery plan which plans to appoint FTI Consulting as controller, a company run by Yanick Blanchard as head of restructuring and scrap metal magnate Herbert Black as interim financier ready to advance 60 million.

The banking syndicate is in complete disagreement with this game plan. He asks the judge to entrust the keys of the company to his agent PricewaterhouseCoopers.

The banks no longer have confidence in the Selection Group because of the latter’s behavior towards them since they granted it their financing in May 2021.

Despite repeated promises of rapid repayments, Selection has instead requested additional funds from the banking syndicate of an average of 6 million per month, the lenders claim in their request.

“Réal Bouclin, founder and ultimate principal shareholder of Selection Group, exercises undue influence on the Company by preventing the implementation of restructuring measures”, argue the lenders.

The lenders submit to the judge that Groupe Sélection has repeatedly undertaken to repay them quickly by selling buildings. However, the few provisions made were made at values ​​lower than those expected, they say. Worse, Selection returned to the charge by asking for more money from its bankers.

They also criticize the many departures of executives and leaders in recent months.

Sélection no longer pays the Fonds FTQ

Selection would also have neglected its partners. Between October 20 and November 2, the company found itself in default in four cases because it did not meet its obligations, the lenders’ request alleges.

The two main ones are the redevelopment of the former Molson brewery in Montreal and the construction of Espace Montmorency – a multi-use complex near the Laval metro.

As for the Molson site – where Sélection is part of a consortium completed by Montoni and the Fonds immobilier FTQ – the RPA giant was unable to respond to a call for funds of 1.8 million, which earned him a notice of default on October 20. The next day, Selection received a formal notice from Montoni. It would have been unable to meet its obligations with regard to the Espace Montmorency site, where the Fonds immobilier FTQ is also in the picture.

“Selection Group has not only lost the confidence of lenders, but has also breached its commitments to its partners, which could harm the value of its interests in key projects, such as [la brasserie] Molson and Espace Montmorency, which are among the company’s most valuable assets,” argue the Sélection bankers.

For other transactions, Groupe Sélection would have decided to keep the money for itself rather than repay its debts. The lenders give as an example a transaction concluded with the Fonds de solidarité FTQ which was to allow Selection to receive 2 million. According to the petition, this sum should have been used to repay certain debts. The RPA giant would have decided to pocket the money instead.

“Selection Group has shown a disregard for its contractual commitments and has shown that it is fully prepared to violate its obligations, to lenders and partners, in order to continue to pursue its unsustainable business model”, bankers say.

The restructuring of Sélection could also have repercussions for taxpayers. Investissement Québec (IQ) – the financial arm of the Québec state – is exposed to the tune of 150 million under loan guarantees granted through the Concerted Temporary Action Program for Businesses (PACTE). This sum is higher than the amount of 120 million known so far.

Who is Herbert Black?

Seventy-year-old multi-millionaire scrap metal tycoon Herbert Black continues to seize opportunities when they arise. The son of Peter Black, founder of a modest scrap yard on rue Moreau, in Hochelaga-Maisonneuve, which opened in 1936, has presided over the family business since 1969. AIM – for American Iron & Metal or American Company of iron and metals – employs more than 2000 people worldwide and has a turnover of more than 1 billion.

The public knows Herbert Black’s whimsical side. He was the one who did not hesitate to pay $100,000 at auction for the tie of Guy Carbonneau, coach of the Club de hockey Canadien, in 2008. We have also heard of the speculator who made $100 million in 1996 in betting on the price of copper.

AIM brings together the Kenny U-Pull brand, which specializes in the low-cost retail sale of self-service auto parts. In 2017, Mr. Black said he bought an average of 8,000 used cars each month. Its subsidiary Delsan is part of the NHSL consortium which won the contract to demolish the old Champlain Bridge. An integrated company, AIM is well positioned to maximize the value of metals from the demolition of obsolete structures. The extent of his real estate portfolio is unknown to us. He was equally discreet about his activities as interim banker until Monday.

Andre Dubuc, The Press