The League group of companies is on the verge of selling one of its properties for $12 million, but none of League’s 4,280 investors will ever see a dime from the sale.
League, which is undergoing a court-monitored restructuring program under the Company’s Creditors Arrangement Act, will be in court next week seeking approval of the sale of an apartment block in Hamilton, Ont.
PricewaterhouseCoopers, the firm monitoring the restructuring, is recommending the court approve the sale of what’s known as the Rosewood property, an older 206-unit apartment building.
In its report to the court, PwC noted the property should be sold as soon as possible given the cost of its maintenance, the price that’s been agreed upon is fair and the sale “would be more beneficial to the stakeholders than a sale or disposition under a bankruptcy.”
But that doesn’t mean much to League’s investors.
While the three lenders that hold mortgages as security on the property will get most of their money back, there will nothing left over to go into the pot to pay out investors.
The sale agreement will see the property sold for $12.125 million to Whitefield Shoe Co.
But the mortgages on the property total $12.5 million — $5.4 million owed to Laurentian Bank and $7.1 million owed to two divisions of Firm Capital Corp.
The only advantage to investors of selling the property seems to be it will no longer drain resources from the League group as the monitor notes Rosewood, because of its age, lack of maintenance and several vacancies, posts a $100,000 shortfall each month.
Investors getting nothing will be a common theme as League attempts to sell 11 more of its 22 properties across the country.
According to PwC, League owes $186 million in mortgages to 26 secured lenders.
It also has 460 trade creditors, considered unsecured lenders, which are owed $19.5 million, and 4,280 investors, who have pumped more than $370 million into various League investments.
The sale of the properties, which according to court order has to be completed by June 28, is not expected to wipe the slate clean.
The monitor has already warned investors they stand to take heavy losses.
The sale of the Rosewood is up for court approval next week.
If approved the sale to Whitefield would close March 6.
According to the commercial real estate firms marketing League’s other properties, there has been some interest in the buildings, but no hard offers.
In Victoria, League has listed 736 Broughton St. for $3.95 million, the Residences at Quadra Village for $14.1 million, and League’s former head office at 710 Redbrick St., which is listed for sale at $7.85 million.
