BFC Construction Corporation
BFC Construction Corporation
Incorporated: 1969 as Banister Continental Corp.
Sales: C$606.8 million (US$438.1 million) (1997)
Stock Exchanges: American Alberta Montreal Toronto
Ticker Symbol: BFC
SICs: 1522 General Contractors—Residential Buildings, Other than Single-Family; 1541 General Contractors—Industrial Buildings & Warehouses; 1542 General Contractors—Nonresidential Buildings, Other than Industrial Buildings & Warehouses; 1611 Highways & Street Construction, Except Elevated Highways; 1622 Bridge, Tunnel & Elevated Highway Construction; 1623 Water, Sewer, Pipeline & Communications & Power Line Construction; 3511 Steam, Gas & Hydraulic Turbines & Turbine Generator Set Units
BFC Construction Corporation is one of Canada’s largest construction companies. Its areas of operation in the 1990s included building large-scale energy developments; commercial, retail, industrial, and residential buildings; and subways, bridges, dams, tunnels, highways, and airports in Canada, the United States, and certain foreign countries. It was also managing construction, procurement of equipment, commissioning, and related services for overseas nuclear-power projects; designing and manufacturing steam generators, mostly for power generation and cogeneration; engaging in underground utilities work in Ontario; and operating in all phases of oil and gas pipeline construction in Canada.
The First 30 Years: 1948–78
The company was founded as Banister Pipelines in 1948, a year after Ronald Banister, a native of the oil-rich Canadian province of Alberta, began laying pipeline with a second-hand ditching machine. He also founded Banister Construction. The parent firm, Banister Cos., was acquired in early 1969 by Continental Computer Associates, Inc. The merged companies were renamed Banister Continental Corp., with Banister as chairman and executive offices in Wyncote, Pennsylvania.
At this time Banister Continental was engaged in all phases of oil and gas pipeline contracting, specializing in projects performed under severe winter conditions. It was operating primarily in the Canadian provinces of Alberta, Saskatchewan, Manitoba, and Ontario, and to a lesser extent in other parts of Canada and in parts of the northern contiguous United States and Alaska. The company was leasing a plant in Edmonton, Alberta, and regional offices in Minneapolis and Anchorage, Alaska. It also, through Continental Computer Associates, owned 60 computer systems, principally IBM System 360 computers, which were available for leasing, along with various other pieces of equipment necessary for the operation of such systems.
In fiscal 1969 (the year ended March 31, 1969), the consolidated company had total income of $9.2 million—about half from pipeline construction and half from computer rentals—and net income of $459,266. Income from pipeline construction grew much faster than that from computer rentals and in fiscal 1973 accounted for nearly 90 percent of Banister Continental’s revenues of C$67.2 million. Net income came to $8 million. (At this time U.S. and Canadian dollars were close to equivalent in value.)
Banister Continental subsequently moved its headquarters to Minneapolis, but in 1973 it moved again to Edmonton, where it purchased a three-story office building and maintained an equipment-repair terminal. It reincorporated there as Banister Continental Ltd. The action was taken to comply with guidelines laid down by the Canadian government so the company could participate in oil and gas projects in Canada. Banister’s son Rodger became both chairman and president of Banister Continental in 1975. By this time the company was also operating in Saudi Arabia, through a joint venture with H.C. Price Co. In addition, it had formed a civil engineering division that, in 1973, began construction of Toronto’s CN Tower, the world’s tallest free-standing structure. This project was completed in 1976. Despite these activities, Banister Continental’s revenues slumped sharply in fiscal 1974 and again in 1975, when the company lost $1.4 million on revenues of only $27.5 million.
In 1976 Banister Continental was ruled Canadian-controlled, allowing it to develop and expand without restrictions in Canada. The ruling also allowed the firm to acquire control of Canadian enterprises or establish new businesses in Canada without being required to give notice or apply for government approval. The outlook for large-diameter pipeline construction in Canada and Alaska was not good at the time, but one Banister Continental executive noted that the company had $27 million in cash and short term deposits and was exploring investment opportunities in the energy services areas. During the fiscal year the company was again profitable on record revenues of $80.5 million.
In 1978 Banister Continental sold its computer-leasing subsidiary for $5.75 million and acquired the remaining half-share in the Middle East joint venture. The company also purchased Pitts Engineering Construction Ltd. of Toronto, a civil engineering firm, for $41 million. This put Banister into the business of building highways, bridges, subways, and dams, as well as its prior energy related activities such as pipeline, marine, gas-distribution, and underground utilities storage facility construction. Severe cutbacks in energy development had reduced Banister Continental’s revenues in fiscal 1978 to C$33.6 million (about $30.2 million in U.S. dollars).
Many Acquisitions, Mixed Results: 1978–90
To keep its employees and equipment working during this slack period, Banister Continental bid low in order to win pipeline contracts in Louisiana, Oregon, and Virginia. As a result the company lost money despite record revenues during the next three years, culminating in a C$14.5 million loss ($12.3 million U.S.) on revenues of C$146.5 million ($124.5 million U.S.) in fiscal 1981. Losses from pipeline projects came to C$26 million (about $22 million U.S.) in that period. Banister Continental’s problems worsened after Pitts, in 1979, became the sponsor and half-partner for the $320 million Revelstone dam and powerhouse on the Columbia River in British Columbia, the largest publicly tendered construction project in Canadian history. The company bid too low for this project, partly because it failed to foresee sharply rising interest rates on the loans needed. As a result it lost $40.8 million on the job, which was not completed until 1984.
By mid-1981 Banister Continental was in severe financial trouble. It was selling off its U.S. pipeline division, wrapping up its involvement in the Middle East, and seeking relief in the form of as much as $30 million in loss-settlement payments for the Oregon project from Northwestern Utilities Ltd. and for the Louisiana project from the federal government, which had failed to provide vital rights-of-way for the project to proceed. The company’s long-term debt had climbed to C$40 million ($32.8 million U.S.) in this period, and it was having trouble meeting payments on its C$140 million ($115 million U.S.) share of the dam project.
Ronald Banister returned from retirement in the Bahamas in early 1981 to assume the chairmanship of the company, in which a family corporation held nearly 25 percent of the common stock. A few months later he also became president and chief executive officer, following the resignation of his son Rodger. In 1982 Trimac Ltd., a Calgary-based energy and transportation concern, agreed to buy about another quarter of the stock at C$7.50 ($6.08 U.S.) a share. (The stock had traded as high as C$24.50 a share in 1980.) Banister Continental returned to profitability in 1984. In 1986 the company enjoyed record net income of C$15.7 million ($11.3 million U.S.). These results were greatly enhanced by a $12.8 million award from Northwest Pipeline Corp. on the Oregon project and a C$12 million ($8.6 million U.S.) claims settlement for the joint venture that built the Revelstone project.
Banister Continental purchased a half-interest in Nicholls-Radtke Ltd., an industrial-construction firm, in 1985. Two years later it purchased The Foundation Co. of Canada Ltd., paying for the acquisition by selling shares of stock to Skanska AB, a Swedish contracting company. This transaction resulted in Skanska holding 48 percent of Foundation and 15 percent of Banister Continental, the parent company. Foundation, a construction firm established in 1910, was specializing in the commercial, institutional, and resources market and was doing business on four continents. The civil engineering divisions of the two companies were integrated, with Foundation management holding most operating responsibility. Also in 1987, Banister Continental acquired The Jackson-Lewis Co., Ltd., a builder of commercial buildings in Canada dating from 1913, and Frontier Construction Co., which was doing the same kind of work in the United States.
BFC’s mission is to be the best and most respected single source of project development, construction and maintenance services. In delivering these services, we strive to exceed customer expectations, to create value for our customer’s business and to earn an attractive return for our shareholders.
The Banister family sold its remaining 16 percent stake in Banister Continental in 1989 for C$14 a share ($11.90 U.S.), or C$13.1 million ($11.1 million U.S.), to Churchill Corp., an Edmonton-based investment-holding concern. Ronald Banister was then replaced as chairman and chief executive officer by Allan S. Olson, president of Churchill. All was not well, however, with the company, which became Banister Inc. in 1990. The firm fell in the red in 1989 because of a C$7.8 million ($6.6 million U.S.) loss on pipeline construction. In 1990 it also lost money on civil engineering and, despite record revenues of C$700.4 million ($598.6 million U.S.), lost C$8.5 million ($7.3 million U.S.) in total.
Banister/BFC in the 1990s
Olson resigned in 1990 because he was unable to agree with the board on the future direction of Banister Inc. Churchill then sold its stake in Banister to Trimac and Skanska for C$9.78 a share ($8.36 U.S.). The new president was William M. Bate-man, who had previously been president of Banister Continental during 1985–86. Revenue fell sharply in 1991, but the firm returned to profitability. That year it sold its 51 percent interest in Pitts International Inc. and completed construction of the ultramodern Terminal III of Toronto’s Pearson International Airport, a project begun in 1988.
In 1993 Banister acquired Majestic Contractors Ltd., which it merged into a new subsidiary called Banister Majestic Inc., which was now the largest pipeline contractor in Canada. The parent company was renamed Banister Foundation Inc. in 1994 and moved its headquarters from Edmonton to Scarborough, Ontario, one of the boroughs that make up the municipality of metropolitan Toronto. The firm remained profitable in spite of a Canadian economic slump and some bad contracts during 1994–95. At its 1994 annual meeting the company reported a record backlog of C$750 million ($547 million U.S.) in orders. That year the company became a major contractor for the construction of Ontario’s Highway 407, a $1 billion project. Also in 1994, Skanska (USA) Inc. sold the parent company’s entire remaining stake (7.9 percent) in Banister Foundation for about C$8.2 million ($6 million U.S.).
Banister Foundation raised its stake in Nicholls-Radtke to 75 percent in 1995 and took full ownership in 1996. By 1997 the parent company, which was renamed BFC Construction Corp. that year, had lined up big projects in China, Hungary, India, and Israel. Net income reached C$9.1 million ($6.7 million U.S.) in 1996 on record revenues of C$715.6 million ($526.2 million U.S.). Of this revenue, civil, industrial, and building construction accounted for 73 percent and utility and pipeline construction for 27 percent. In 1997 BFC’s revenues slumped to C$606.8 million ($438.1 million U.S.) and its net income to only C$1 million.
At the beginning of 1997, Foundation (which had recently absorbed Banister Majestic), Jackson-Lewis, and Cliffside Utility Contractors—another subsidiary—were amalgamated into a new subsidiary named BFC Construction Group Inc. Driver Ltd., a mechanical- and electrical-construction contractor, was purchased that year and placed in a subsidiary called BFC Industrial-Driver Ltd. Nicholls-Radtke was reorganized as BFC Industrial-Nicholls Radtke Ltd. Both these subsidiaries were engaged in industrial construction in Canada, but the latter included Innovative Steam Technologies, a division that was designing and building steam generators. Frontier, which became BFC Frontier, was active in building construction, primarily in the state of Washington, and also had a design-build service for its clients through 50 percent-owned Group West Associates Inc.
BFC Civil, a division of the parent company, was specializing in the construction of large scale energy developments, complex building structures, subways, bridges, highways, dams, tunnels, and airports in Canada, the United States, and internationally. BFC Buildings was constructing commercial, retail, and industrial buildings, including residential condominiums, in Canada. BFC Nuclear Managers (formerly Foundation Nuclear Managers) was active in services for overseas nuclear-power projects, currently in China and South Korea.
BFC Utilities (formerly Cliffside Utility Contractors) was engaged in underground utilities work throughout Ontario. BFC Traffic Technology, a new unit, was engaged in the construction and installation of traffic-signal and freeway traffic-management systems and highway lighting. BFC Pipelines (formerly Banister Majestic) was operating in all phases of oil and gas pipeline construction in Canada. The parent company also held a 25 percent interest in Bantrel Inc., which was performing services in the petroleum sector in Canada, the United States, and overseas.
BFC Construction’s chief stockholders at the end of March 1997 were Trimac, with 22 percent of the shares of common stock, and Mackenzie Financial Corp., with 11 percent. The company’s long-term debt was C$48.4 million at this time. In addition to its Toronto headquarters, the company had major facilities in Ellerslie, Alberta, and Cambridge, Ontario.
BFC Construction Group Inc.; BFC Frontier (United States); BFC Industrial-Driver Ltd.; BFC Industrial-Nicholls Radtke Ltd.
BFC Buildings; BFC Civil; BFC Nuclear Managers; BFC Pipelines; BFC Traffic Technology; Innovative Steam Technologies.
“Banister Founders Plan to Sell Shares,” Financial Post, November 20, 1989, p. 6.
“Banister Given Status as Canadian-Controlled,” Globe and Mail, September 24, 1976, p. B6.
Barnes, Angela, “Banister Looking at Domestic and Foreign Investment Opportunities,” Globe and Mail, October 14, 1976, p. B6.
Chianello, Joanne, “Banister Builds on Business,” Financial Post, November 22, 1994, p. 14.
Cuff, Daniel F., “Reshuffling at Banister Brings Back President,” New York Times, October 23, 1990, p. D4.
Gherson, Giles, “Tough Times for Pipelining at Banister,” Financial Post, May 23, 1981, pp. 1–2.
Marcial, Gene G., “Leaning Hard on Banister,” Business Week, March 17, 1997, p. 110.
“Renamed Banister Moves to Toronto,” Toronto Star, May 20, 1994, p. B7.
Stinson, Marian, “Canadian Construction Firms Join Forces,” Globe and Mail, March 28, 1987, p. B4.
“Trimac Agrees to Buy Holding in Banister,” Wall Street Journal, February 11, 1982, p. 36.