Friday, August 22, 2014
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Second time around for exec

Chairman of group that bought Arctic Beverages has acquired the bottler before

By: Martin Cash

Winnipeg Free Press

No matter how hard you try, it's impossible to get Marv Tiller to dish on the downfall of Tribal Councils Investment Group.

Tiller, the former head of the Hudson Bay Company's Northern Stores division -- who organized the leveraged buyout that created what is now the North West Company -- was the founding CEO of TCIG.

Back in the late '90s, TCIG's first and arguably best deal was the purchase of Arctic Beverages, then a Flin Flon-based Pepsi bottler.

Tiller left TCIG in 2002, and his involvement with TCIG has come full circle. He is now the chairman of a new consortium of mostly Saskatchewan First Nations who bought the assets of Arctic Beverages in May after it was placed in creditor protection.

Tiller was succeeded by Allan McLeod at TCIG. McLeod ran the much-heralded First Nations investment firm until accusations of exorbitant head-office expenses and investor oppression caused a boardroom coup last year ousting McLeod and five others.

Since then, TCIG's operating companies have been falling like dominoes.

In addition to the loss of Arctic Beverages this year, TCIG's fuel, wholesale and trucking businesses have all shut their doors.

Tiller said he has not had any dealings with TCIG since the early part of the last decade.

"I am disappointed that things did not go better for them," is all Tiller will say about the slow collapse of what was once seen as a model First Nations-owned enterprise.

With secured lenders putting pressure on TCIG and with management in disarray, Arctic Beverages was placed in creditor protection earlier this year with nearly $4 million owing to RBC, more than $5 million to Exchange Income Corp. and more than $1 million to Pepsi.

Arctic was the largest of TCIG's companies, with revenues of about $30 million per year, and always its most profitable.

Bought it twice

"This is the first time I've ever done this," said Tiller on the occasion of acquiring the same business twice. "When we were sitting across the table from the Pepsi people they were saying, 'Wait a minute, these are the same folks from before.' We even had the same lawyers and financial advisers."

Sean Post, who formerly ran Arctic Beverages for TCIG, will be the CEO for the new owners.

It is one of the largest territories in Pepsi's distributor network, covering all of northern Manitoba and Saskatchewan, part of northern Ontario and all of Nunavut.

"It is an interesting niche," Post said. "You have to have a real understanding of transportation. Pepsi appreciates our expertise. We know how to handle winter roads, sealift, fly-ins. It is a complex business."

The new owners are a consortium of two Saskatchewan First Nations investment groups and the investment arm of Opaskwayak Cree Nation near The Pas.

Athabasca Basin Development (ABD), the largest shareholder of the group, is owned by seven northern Saskatchewan First Nations. It controls or owns interest in 11 companies and had annual revenue of $145 million before the Arctic deal.

Geoff Gay, the CEO of ABD, based in Prince Albert, Sask., said, "This deal was put together very quickly, but it did not take us long when we saw who the partners and CEO and chair were. Marv Tiller has a very good reputation in these parts. We knew it would be a great fit for us."

Tiller said the new owners have an excellent governance model -- as opposed to TCIG's reputation for lax boardroom oversight. Gay said ABD pays only modest dividends and retains cash so it can absorb shocks that occur, especially in its resource sector businesses.

The new ownership of Arctic will start out debt-free. Court documents confirm it was the highest bidder and paid enough to pay off all the major creditors including RBC and Exchange Income Corp.

Terms and conditions of the deal have not been disclosed. But Post said all 70 former Arctic employees will be retained. Tiller said he believes its Sherwin Drive facilities are more than it needs, but no arrangements have been made to take up alternative facilities.

Denis Sacks, director of sales, franchise bottling operations for PepsiCo Beverages Canada, said "We're pleased that Arctic Beverages will continue to build on its rich legacy as Canada's only First Nations-owned Pepsi franchise."

Tiller said Pepsi was concerned its accounts in the region continue to be managed properly.

"Marv and Sean brought great leadership to Arctic Beverages," Sacks said.

"There is significant value in having knowledgeable people like them back in the business."

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