A handful of investors conducted their annual vigil last week as Barcelona Traction, Light and Power Co. held its annual meeting.
The fading hopes of the shareholders for compensation received little encouragement from chairman Richard Bachrach.
The company was declared bankrupt in 1948 by a small town court in Spain which ordered its assets sold.
But more than 30 years later, the annual ritual required to keep the company alive was carried out again. Directors were elected, auditors reappointed and financial statements presented as required under Canadian law.
The major shareholder, a Belgian company, financed a quarter-century legal fight to recover the assets or gain compensation, but after spending millions of dollars, it abandoned the battle in 1974.
Asked if hope still remains, Bachrach quoted an earlier report by the company - "although there are no favorable indications whatsoever, one may not altogether exclude all hope that responsible persons in authority may one day recognize that this company and its shareholders should obtain compensation."
Barcelona was formed in the early years of this century by S. F. Pearson, a New York engineer who was a visionary concerning hydroelectirc power. He also established Brazilian Traction, now Brascan Ltd., and Mexican Light and Power Co., taken over by the Mexican government in 1960.
The company sprang up in an era when Canadian companies and Canadian capital spread hydroelectric development throughout the world. This helped create the image of Canadian expertise in electric-generating equipment that to this is an intangible plus for export sales of the Candu nuclear reactor.
Pearson drowned in 1917 in the sinking of the Lusitania by a German submarine off the coast of Ireland. The Lusitania incident, with the loss of about 1,200 lives, led to the entry of the United States into World War I.
Barcelona was a thriving company in 1936 when the Spanish Civil War broke out. The forces of fascist Generalissimo Francisco Franco were financed during the civil war by Juan March, an entrepreneur and mystery man, who later took over the assets of Barcelona.
Although it is a Canadian company, Barcelona issued bonds payable in British pounds sterling and Spanish pesetas. March was a major buyer of the sterling bonds in the unsettled war and post-war period at depressed prices.
Conveniently, the Spanish government imposed currency controls, blocking the conversion of pesetas into sterling. Unable to obtain funds from its operating subsidiaries in Spain, the company couldn't pay the interest on the sterling debt.
In the little Spanish town of Reus, west of Barcelona, a court declared the company bankrupt. The assets were "optioned" with the only bidder the March interests.
Replacement costs of the assets has been estimated at more than $200 million, or about $100 a share. A long and bitter legal battle ensued and finally was abandoned in 1974 because the company could find no court of "competent jurisdiction" outside of Spain, Bachrach said.
An Ontario court said in 1954 that "what has occurred in Spain...strikes at the fundamental rights of all companies in this country which have made heavy capital investments in foreign countries, and is a course of conduct which can have far-reaching and disastrous consequences for Canadian investors."