Bristol shut down operations Monday morning. On the same day, St. John’s-based M5 said it had brokered a deal with Bristol’s receiver, Ernst and Young, to hire 78 employees, including senior executives, and take on its advertising clients.
M5 president and founder Gary Wadden said his company is focused on “integrating new employees into M5’s corporate culture and developing new relationships with current Bristol clients.”
It is not a cash deal, according to Jim Megann, senior vice-president client services for M5 in Halifax.
“We have not merged or purchased Bristol. We did work with the former management team and the receiver; they went into a voluntary shutdown with a receiver.”
Megann said Bristol Group approached M5 a few months ago about buying or merging with the company.
“We’re a fiscally conservative company, and … the opportunity was going to fall outside of our business model, so we declined.”
Things changed in recent weeks.
“Subsequently, they came back and began a second set of discussions,” said Megann.
Bristol started out 34 years ago as Saga Communications. Once the pre-eminent advertising company in Newfoundland and Labrador during the days of the Tobin government, Bristol held a number of high-profile provincial contracts such as tourism.
Four years ago, Bristol created a subsidiary in Doha, Qatar.
That move led to “substantial losses for Bristol Group Inc. in Atlantic Canada,” according to a release issued by Saga Investments Inc., the owners of Bristol.
“It was not possible for Bristol Group Inc. to recover from those losses, which resulted in a structured voluntary shutdown of its operations.”
Louis Leger, Bristol’s president, told the Halifax Chronicle Herald Monday the Qatar investment was “way beyond” what the company expected.
“Three million dollars off your equity base is a huge deal, especially in the context of being in an industry that is in change,” he said.
Bristol filed for bankruptcy Monday morning, said Mathew Harris of receiver Ernst and Young.
Bristol Group Inc. owes $1.125 million to the Business Development Bank of Canada, a government-owned business financing agency. But $576,000 of that is not secured, according to information with the Office of the Superintendent of Bankruptcy.
“We’re a fiscally conservative company, and … the opportunity was going to fall outside of our business model, so we declined.” - Jim Megann, senior vice-president client services, M%
Bristol has $2.825 million in total assets, with a deficiency of $3,284,669.
Its other secured creditor is the Bank of Nova Scotia, which is owed $1.7 million. Unsecured creditors are owed $3,284,638.
More than 75 of Bristol’s 100 emp-loyees are expected to join M5.
“We felt that rather than closing, that this offers us an opportunity to transition our client relationship and our people to M5,” said Leger.
“The result is going to be one of the largest agencies in Canada.”
Megann said M5 has made offers to 78 Bristol employees.
“A number of those offers have been accepted already. Obviously, there’s some synergies when you have two similar companies like ours. We didn’t make offers to everybody.”
M5 executives will also be meeting with Bristol clients.
Bristol had about 20 employees in St. John’s, many with subsidiary Omnifacts, which specializes in market research and opinion surveys. It will merge with M5’s research arm to create MarketQuest-Omnifacts.
Four senior Bristol executives will also join M5:
• Louis Leger becomes managing partner of M5PR New Brunswick.
• Rick Emberley, executive chairman who founded Bristol in St. John’s in 1976, becomes senior research counsel based in Nova Scotia.
• Craig Wight, vice-president of research for Bristol, becomes vice-president of MarketQuest-Omnifacts based in New Brunswick.
• Jean Brousseau, vice-president of Bristol, becomes vice-president of M5 in New Brunswick.
With offices in Halifax, Moncton, St. John’s and Doha, Bristol clients include Atlantic Canada Toyota Dealers, Bell Aliant, Molson, Newfoundland and Labrador Liquor Corp. and North Atlantic.
Heaquartered in St. John’s, M5 also has offices in Halifax, Moncton, and Manchester, N.H.
The company was founded by Wadden in 1981 and has 160 employees.
Its clients include GM Canada, Hickman Motors, Nalcor Energy, New Brunswick Tourism, Kent Homes and Marine Atlantic.
With files from The Canadian Press