It’s looking increasingly like the Mount Baldy ski resort will be closed for the 2015-16 season once again as a new potential deal has triggered a court dispute. The resort was closed for the 2013-14 season, but opened for three months early in 2015. (Richard McGuire file photo)
An agreement with a new prospective buyer that could have seen the Mount Baldy ski resort open this season hit a major bump in a Vancouver court Monday.
The chance of opening this season now looks unlikely.
The agreement in principal was reached in mid-November after the receiver and major secured creditor rejected a last-ditch offer from Baldy Capital Corporation on Nov. 4.
Baldy Capital Corporation operated the resort last season under an operating agreement from January to March, 2015 until a purchase agreement could be reached. That purchase fell through last spring and efforts to reach a new agreement this fall were unsuccessful.
When lawyers for the receiver and secured creditor appeared in court Monday, seeking clarification and permission from the court that would have allowed the new deal to go ahead, Baldy Capital Corporation filed an objection.
Gary Powroznik, the receiver with G-Force Group, said that because the application before the Supreme Court of B.C. is now contested, it has been put over until Friday.
However, he’s doubtful the court will have time to hear the arguments then, meaning it could drag out past Christmas and into the new year.
“What happens at Christmastime is a lot of judges go on holiday,” he said. “And there are a lot of family matters (in the court) with people wanting custody at Christmas. So what happens is the court gets overloaded. They said today they were short seven judges.”
Without the court dealing with the receiver’s application, it’s unlikely the potential purchaser could get insurance to operate the resort in the short term before a purchase can be finalized.
Powroznik emphasized that the purchase could still go through over the longer term if the buyer remains interested.
The purchase and short-term operation of the resort are two separate issues.
“It doesn’t necessarily impact the purchase, but it impacts the opening big time,” he said. “What we were trying to do is get it open for this year. Because it got delayed (in court) and we can’t give it to them, they can’t get started.”
Court documents say the prospective purchaser wished to begin pre-season maintenance immediately to try to open the resort on Dec. 26.
“Normally many of these (maintenance) activities are started in the summer and early fall so the resort can open before mid-December,” Powroznik stated in a first report of the receiver, filed in court on Nov. 25.
“Accordingly, very little time is left to ready the resort to open for skiing this season and each day that the prospective purchaser is delayed in starting its activities has significant potential negative economic impacts…”
He added that assets deteriorate in the winter and they are harder to service. Local skiers are buying passes at other resorts, which will limit revenue and could negatively impact the potential sale of the resort.
If the letter of intent from the purchaser and resulting asset purchase agreement do not proceed, “the receiver will have to take steps to immediately mothball the resort for the winter,” the document said.
Powroznik said he can’t disclose the identity of the potential purchaser at this time, but added there are two key parties and one is a “very, very experienced” ski hill operator.
The parties are Canadian and one, apparently an investor, is from B.C.
The court document says the new investor originally was working with an international prospect who offered $2.5 million in cash in May 2015 to purchase the resort, but subsequently lost interest for other reasons.
The real estate agent and immigration consultant involved in the aborted deal then became interested in the investment themselves.
They were introduced to the experienced operator, who it appears was the same person who submitted an offer in September 2014, but was unable to raise sufficient financing.
Meanwhile, Fred Johnston, president of Baldy Capital Corporation, continues to control the SkiBaldy.com website where he has issued several news releases suggesting he plans to continue efforts to open the resort despite another potential purchaser.
Last Thursday he issued an update saying the window of opportunity has now closed to complete a purchase of the resort and perform the lift maintenance and certification needed to open the resort this season.
“We are very disappointed that we are unable to open the hill with the programs and improvements that we had planned for this season, but we intend to stay the course with our plans and commitments for next year,” Johnston said in the update.
He said he is planning to continue with initiatives to open the resort next year, adding he can’t comment in further detail “as matters are now before the court.”
Johnston was given an opportunity to comment on recent developments, but declined to comment on the advice of his lawyer.
Johnston previously insisted that an agreement was reached in December 2014, which he won’t walk away from, suggesting he will pursue it in court.
Powroznik insists in his court documents that Baldy Capital Corporation defaulted on its deal, so it is no longer valid.
In the recent receiver’s report to the court, Powroznik claims that Baldy Capital Corporation and its related company Baldy Operating Corporation defaulted on funding commitments last season and failed to cover operating costs totaling more than $65,000 in utilities and debts to unpaid suppliers and employees.
“Some of these suppliers continue to refuse to do any work for the receiver or any other prospective purchaser until they are paid the amounts due,” said the report. “This has created a significant problem for the receiver in attracting interest from other potential investors for the 2015-16 ski season.”
Powroznik said Baldy Capital Corporation was served with a copy of his recent application to the court as an “abundance of caution” even though the application deals mainly with the new buyer.
The application to the court requests:
- An order allowing the receiver to proceed with a conditional letter of intent between the receiver and potential purchaser;
- An order approving a “break fee” of $200,000, which would be paid to the potential purchaser to cover operating expenses if the purchaser operates the resort and the receiver subsequently sells it to someone else;
- An order allowing the receiver and purchaser to enter into an agreement allowing the purchaser to operate the resort during the 2015-16 season prior to completing a purchase;
- An order allowing the receiver to increase borrowings by $300,000 to a total of $800,000;
- An order that the receiver can serve on anyone requiring them to provide information, documentation and records, including computer records, to the receiver regarding the operation of the resort during the 2014-15 season.
RICHARD McGUIRE
Osoyoos Times
