GOING FOR BROKE

A journalist's breezy and bemused but on-the-money account of a frog who became, however briefly, a merchant prince. In evident wonder, Rothchild (A Fool and His Money, etc.) recounts how Robert Campeau, a French-Canadian entrepreneur who had achieved success as a real-estate developer in his own country, began looking for new worlds to conquer during the mid-1980's. With exquisite timing, the vaultingly ambitious speculator somehow convinced Wall Street that it made good business sense to advance him $4 billion to gain control of Allied Stores (whose holdings included Bonwit Teller, Brooks Brothers, Jordan Marsh, etc.). Within months, he managed to borrow another $7 billion to buy Federated, a carriage-trade chain with such outlets as Bloomingdale's, Bullock's, and Filene's. Having overbid for both acquisitions, Campeau was in deep trouble from the start. As Rothchild makes clear, the upstart debtor-baron's penchant for wishful thinking made him a difficult client for the white-shoe commercial and investment bankers who put up with his capricious ways. In hopes of handsome fees, putatively prudent intermediaries nonetheless raised the capital Campeau needed to realize his flights of fancy. Once securities markets broke and the retailing industry took a turn for the worse, however, the rookie proprietor's lack of operational and financial savvy hastened the collapse of his highly leveraged enterprise. The fallout from the resultant Allied/Federated bankruptcy was widespread. In addition to the owner, the casualty list ranges from investors in the junk bonds used to underwrite the takeovers through brokerage houses stuck with bridge loans, rival merchandisers forced to meet or beat price cuts instituted to unload excess inventory, suppliers not paid for their goods, and (at last count) over 25,000 others whose claims aggregate $8.2 billion. A marvelously entertaining and tellingly detailed recap of fiscal folly that reflects precious little credit upon any of the principals. (Eight pages of b&w photos—not seen.)