Imperial Parking Corporation

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Imperial Parking Corporation

601 West Cordova Street, Suite 300
Vancouver, British Columbia V6B 1G1
Canada
Telephone: (604) 681-7311
Fax: (604) 681-4098
Web site: http://www.Impark.com

Public Company
Incorporated: 2000
Employees: 3,500
Sales: $139.8 million (2002)
Stock Exchanges: American
Ticker Symbol: IPK
NAIC: 812930 Parking Lots and Garages

Imperial Parking Corporation, based in Vancouver, Canada, is the largest provider of parking services in Canada and the fourth largest in North America. Impark manages, leases, or owns 1,343 parking lots in Canada and another 294 lots in the United States. Altogether the company controls more than 320,000 parking spaces located in 32 North American cities, which include Vancouver, Toronto, New York City, Philadelphia, Washington, D.C., Chicago, Miami, and San Francisco. In addition, Impark provides parking lot security, ticketing, and collection services for its own lots as well as others. Specialized services include valet parking, car washing, and auto repair. Impark manages the parking spaces for a wide variety of clients: government-owned facilities, luxury hotels, stadiums, airports, hospitals, colleges, and public transit. Under leasing arrangements, Impark pays an annual rent to the property owner and then collects all revenues. Although the company is responsible for most operating expenses, it is usually not responsible for major maintenance costs. Under management contract arrangements, Impark is paid a base month fee, plus incentives and fees for ancillary services. Impark also owns some parking facilities outright. While a great outlay of cash is required, there is also greater potential for higher profits with company-owned lots. As of December 31, 2002, Impark leased 568 lots (64,426 spaces), managed 1,054 lots (257,126 spaces), and owned 15 lots (1,637 spaces).

Impark founded in 1962

Businessman Arne Olsen started Impark in 1962 with a single surface parking lot. In 1968, Paul Clough joined the company, beginning a 20-year association. A driving force in the growth of the business, Clough would become president and CEO, and eventually chairman, of Impark. At the time of Clough’s arrival, Impark was comprised of a handful of surface lots. Clough told BC Business in a 1992 profile, “We had absolutely no money in the company. I did everything from payroll to cleaning lots, counting cash and installing signs. There wasn’t anyone else to do it.” It wasn’t until 1980 that Impark dominated the Vancouver market. A year later the company expanded into Edmonton, followed by Calgary in 1983.

Olsen was bought out in 1988 by a group of Hong Kong Investors led by publisher Sally Au. During the ensuing five years of overseas’ ownership, Clough ran Impark as president. The company was especially successful in landing management contracts with new sports and entertainment venues such as Toronto’s Sky dome, Calgary’s Saddledome, and Vancouver’s BC Place. Impark also won the parking contracts for the 1988 Calgary Winter Olympics. In addition, the company entered the U.S. market in 1989 with a single parking facility in Minneapolis. Clough explained the company’s success to BC Business: “We realized from the beginning that the parking business has a poor image. We have strived to present ourselves in a crisp, clean, courteous manner. Service and outstanding staff have been the keys to success.”

Canadian Ownership Returns in 1991

Impark return to Canadian ownership in 1991 when management arranged a buyout financed by Toronto’s Penfund Partners Inc. and Vancouver’s First Generation Financial Group. At this point, the company’s portfolio totaled 940 parking lots, 90 percent of which were managed by contract. A year later, Impark, now Canada’s largest car park management company with operations in all of the country’s major cities, cracked the 1,000 lot mark, while annual revenues topped $100 million.

Ownership of Impark changed hands again in 1993, when the company was purchased by Canadian Maple Leaf Financial Corp. Ironically, Hong Kong investors played a large part in the creation of Canadian Maple Leaf. The fund was established by an ex-dentist born in Minnesota, Steven Funk (who became a Canadian citizen in 1989). In the mid-1980s, he was involved with First Generation Financial Group Ltd and turned to the Far East in search of investment opportunities. The fund bought a stake in a Hong Kong electronics manufacturer and then two years later looked to strengthen its ties to Hong Kong by taking advantage of Canada’s immigrant investor program. Funk formed Canadian Maple Leaf as a vehicle for attracting immigrant funds for investment in Manitoba, British Columbia, and Alberta. First Generation had been part of the 1991 purchase of Impark, gaining an 18.75 interest in the company; it later gained a similar stake by lending Impark C$4 million. In 1993, First Generation merged with Canadian Maple Leaf, the result of which gave Canadian Maple Leaf a 37 percent interest in Impark. Later in that year, Funk decided to buy the balance of the parking company. Because of its ties to the region, Impark now looked to the Far East as a place to expand, soon signing a joint venture with a Taiwanese firm as well as holding preliminary talks with Chinese officials about providing traffic management expertise to a number of cities in China. Impark also considering bidding on a Hong Kong traffic meter contract and the parking concession at the new airport. In the end, Impark established operations in Taipei, Taiwan, and Hong Kong, but sold these assets in order to focus on growth in the core market of North America.

In 1994, Impark went public, raising some C$15 million, half of which was used to virtually wipe out the company’s debt. As a consequence, Canadian Maple Leaf’s stake in the business fell to 46 percent. Impark was now well positioned for further expansion and to fund acquisitions. It added 11 Hong Kong parking lots, took on more Minneapolis-St. Paul operations, and moved into the Milwaukee market. In 1995, Impark completed a pair of acquisitions. In January, it paid approximately C$4 million for Winnipeg-based Inner-Tec Security Consultants Ltd., provider of guard and mobile patrol services. A month later, Impark acquired its largest Canadian rival, paying C$12.1 million for Toronto-based Citipark. As a result, Impark added from C$80 million to C$90 million in annual sales.

In 1996, Impark became interested in acquiring Houston-based All Right Parking, which was the largest U.S. parking management company, operating approximately 1,700 parking lots. Because the price would be in the $200 million range, well beyond its means, Impark sought a financial partner in Onex Corporation, a Toronto-based corporate buyout firm. Instead of helping buy All Right, Onex decided to buy out Canadian Maple Leaf. An Onex unit, Vencap Acquisitions Holdings Inc., paid C$27 million for a controlling stake in Impark, but it never did buy All Right Parking. Onex was a grab-bag collection of assets, involved in such diverse activities as airline catering, auto parts, and contract electronics manufacturing. The hope was to use Impark as a platform from which to build a dominant North American parking company. However, Onex personnel was unfamiliar with the industry and soon locked horns with Clough and his management team.

The Onex era for Impark lasted little more than a year. Despite giving up on it major plans for Impark after realizing that a number of rivals harbored the same vision, Onex still did well on its investment. In March 1997, Onex sold Impark to a Cleveland-based real estate investment trust, First Union Real Estate Equity & Mortgage Investments, for C$65 million and the assumption of C$40 million in debt. Onex pocketed a C$27 million profit on its C$31 million investment in Impark. First Union subsequently transferred the management of its Cleveland parking facilities to its new asset and also began to spend money adding to Impark’s portfolio of parking lots. Again, Clough carried on as CEO and chairman, but his days at the company would soon come to an end when Impark’s parent corporation became the object of a hostile takeover.

Clough Ousted in 1999

A group of investors headed by hedge fund Gotham Partners seized control of First Union in 1998 and began to sell off assets. As Impark was prepared to be spun off, Clough was replaced by Charles E. Huntzinger, who was named president and CEO in January 1999. He boasted a considerable amount of experience in the parking industry. From 1978 to 1992, he served as chief operating officer for Parkway Corporation, followed by a stint with Spectacore, where he was in charge of parking operations for Philadelphia’s Spectrum arena. From 1993 until joining Impark, Huntzinger was a vice-president with Central Parking Corporation, the largest parking lot operator in North America. The greatest problem he faced coming to Impark was the company’s commitment to some 500 low-yielding parking lots. He made efforts to cancel or renegotiate these deals, while also cutting overhead costs. To improve margins, Impark began to buy up smaller operations in the United States and eastern Canada, where parking rates were higher, as were profits. In 1998, Impark added 50 new locations, with 25 new operations to follow in 1999. Highlights of the company’s U.S. efforts in 1999 included reaching an agreement to develop and manage parking for the new San Francisco Giants baseball stadium; the signing of six major Seattle management contracts for Class A commercial towers; landing a management contract for Cincinnati’s Tower Place Garage and 22 other area properties; and the forging of a partnership with New York’s Rapid Parking to do business in New York and New Jersey.

Company Perspectives

Since beginning with a single parking lot in 1962, our company has single-mindedly concentrated on developing our chosen area of expertise-parking.

In May 2000, the spinoff from First Union was completed and Impark once again became an independent, public company (trading on the American Stock Exchange). As part of this transaction, the company underwent a financial restructuring that allowed it to retire its long-term debt and establish a capital reserve to fuel future acquisitions. Management’s goal was to achieve diversity by spreading its operations across the North American market. It was especially interested in U.S. cities, with the long-term desire to reach a 50/50 balance in revenues between its Canadian and U.S. operations. In addition, the company endeavored to attain a more balanced mix between leased and managed operating arrangements. Impark added 52 new locations in 2000, and then picked up the pace in 2001, adding 88 locations. Of particular importance was the company’s move into four new major markets: Atlanta, Chicago, Philadelphia, and Washington, D.C. Most of Impark’s expansion in 2001 was the result of the largest acquisition in the company’s history, the $4.65 million purchase of DLC Management Group, a specialist in hospital parking. The DLC acquisition brought with it more than 70 locations, including parking lots located in Atlantic City, New Jersey, and Wilmington, Delaware, in addition to Philadelphia and Washington, D.C. Impark now decided to move its U.S. Corporate Office from Cleveland to Philadelphia, which was more centrally located in the eastern U.S. markets where the company hoped to grow the business (as well as where Huntzinger was raised). At the same time, management made it clear that it planned to also target major Midwest cities such as Chicago, Milwaukee, and Minneapolis.

Aside from the progress Impark made in 2001, it also faced some significant challenges. In San Francisco and Seattle, business suffered because of the collapse of the high tech sector. Rioting in Cincinnati forced many Impark facilities to be closed for weeks on end. Business was also affected by the slowdown of the economy and by the tragic events of September 11, 2001. The terrorist attacks on New York City and Washington, D.C., forced the cancellation of all commercial flights for a week, crippling the business of airport parking lots. Even after flights resumed, air travel failed to return to pre-September 11 levels. Moreover, tourism was affected in New York and elsewhere, leading to lower demand for parking. The shaky economy was pushed into recession, resulting in an increased level of layoffs and cutbacks in commuters using parking facilities. Parking lot operators also faced increased security costs in the aftermath of the terrorist attacks.

Despite difficult business conditions, Impark continued to add locations, grow revenues, and post a net profit in 2002—a testament to management’s efforts at diversification and attaining a balanced mix in its portfolio. Although more cautious about expansion than in the past, Impark added 53 new locations in 2002, entering one new market: Miami, Florida. For the year, the company posted revenues of $139.8 million, a sizable increase over the previous year, which could be almost entirely attributed to U.S. operations. Canadian sales for the year were flat. When the economy recovered, Impark expected to be well positioned to take advantage of improved conditions. It would likely do so, however, with a different majority holder of its stock. In June 2003, Gotham Partners, which continued to own a 31.1 percent stake in the company, hired investment bank Bear Steams to analyze its options, with the clear intention of selling its interest in the company.