THE SHAMES Mountain Ski Corporation would have gone into bankruptcy had a deal not been worked out to sell it to a local non-profit group.
Speaking last week, corporation president Gerry Martin confirmed that the corporation's shareholders were in no position to open this coming winter.
“That's a fair statement,” said Martin when asked if the corporation, a perennial money-loser since opening in the winter of 1990-91, faced bankruptcy.
“It would have been a lose-lose situation for everyone,” he said.
As it is, Martin said each of the major shareholders, numbering five people, will still be out of pocket despite the sale. He said corporation directors have guaranteed bank loans worth several hundreds of thousands of dollars and other significant debts.
“I've just been looking at some figures here and they will still each be covering $65,000 to $75,0000,” Martin continued.
The sales deal with My Mountain Co-op does call for local companies with unpaid debts to be paid out of the first installment to be forwarded to the ski corporation.
“That has been part of our discussions [with My Mountain Co-op] and we have said that is our intention,” said Martin.
The deal, details of which are now gradually emerging, and which will be voted upon by the ski corporation's shareholders Sept. 8, calls for the co-op to make payments over three years.
A statement on the co-op's website indicates it has the money to make a first payment on a total sales price of $550,000.
“The monies paid for the first payment will ensure past creditors, local Terrace businesses, owed about $200,000 for past operations will be paid, thus ensuring locals are not left unpaid,” says the statement.
In all, the co-op, which will operate as a non-profit entity, says it has raised $380,000 which is well short of its original target of $2 million. That would have covered a first-proposed sales price of just over $1.2 million and $800,000 to cover legal fees, environmental projects and ski lodge and equipment repairs.
That original sales price included a debt of more than $560,000 owed by the corporation to the provincial government.
Of that amount, $419,994 is from an unpaid tourism development loan taken out by the ski corporation years ago and $147,751 represents unpaid lease payments the corporation was supposed to have paid to the province for the use of the mountain.
But these two debts have now been separated from the sales deal between the co-op and the ski corporation and is the subject of an entirely different set of negotiations, said Martin.
More than likely the unpaid royalty debt will be deferred and rolled over to be taken care of by My Mountain Co-op, he said.
“We have an indication the government is willing to look at a long term deferral,” Martin added.
“We still need to address the [tourism] loan and that's in negotiations and we have made an offer,” he said.
With a purchase price of $550,000 and agreeing to pay the unpaid $147,000 in royalties and if $800,000 was still needed for expenses and renovations, the co-op will need to raise close to $1.5 million in all.
With $380,000 already raised, the co-op will still need approximately $1.1 million.
In anticipation of a successful sales deal being approved, Shames Mountain Ski Corporation records are already being transferred to the My Mountain Co-op offices.
My Mountain Co-op officials were not commenting on sales or other details last week.
In an emailed statement, they said a full update was being prepared with the intention of releasing it this week.
“We request your patience while we prepare a communication plan as it seems that there is a misunderstanding in the community about the co-op and what it means to Terrace,” said the email.