Mission Hill Development in South Kamloops To Go To Creditors To Resume Construction
This article appeared in the Kamloops Daily News on April 21st, 2011 and was written by Cam Fortems.
A meeting is set for next week for creditors to approve a deal to resume construction of the incomplete Mission Hill project so it can be marketed and sold this spring.
The creditors meeting April 26 is part of a restructuring of more than $100 million in real estate debt by Kamloops developer Mike Rink.
Christopher Ramsay, the Vancouver lawyer representing Rink’s New Future Group of companies under the Companies’ Creditors Arrangement Act (CCAA) proceeding, said the vote will allow mortgage holders and contractors owed millions to determine the project’s future.
A project evaluation done late last year said even if the first two phases of Mission Hill, a condominium project off Summit Drive, are completed and sold, there is only enough equity to pay the first mortgage from Harbour Capital.
Despite the grim financial prognosis, creditors are being asked to OK new financing to finish the project in hopes it will be more profitable and they will receive some proceeds.
Under the proposal, Harbour receives all proceeds until its $21-million loan is repaid. Other financing and legal costs will be added.
Under the proposal to be voted on, second mortgage holders and contractors owed another $15 million will be given promissory notes that may be redeemed if units are ultimately sold for more than the estimated value.
“The current market value appraisal and the Monitor’s description of costs to complete suggest that there will be no realization for creditors beyond Harbour,” states a report from an accounting firm presented to the B.C. Supreme Court this week.
Despite that forecast, Rink’s lawyer said approval is the most practical measure.
“At the end of the day it’s better to approve an agreement where creditors get something (promissory note) rather than going into bankruptcy, where they get nothing.”
In order for the plan to be approved, a majority of creditors in each class, representing two-thirds of the value, must vote in favour. If it fails, Rink can go back to court to ask for the court to OK it instead.
Ramsay said if the deal is approved, construction will resume quickly with marketing and sales this spring or summer.
City of Kamloops chief building inspector Kundun Bubbar said Rink must show he has financing, along with a project time to complete construction, before construction can resume.
Rink’s companies sought protection from creditors late in 2010. Since then, lawyers and financiers have manoeuvered to refinance, complete construction and avoid bankruptcy on each of seven troubled projects.
A restructuring at one Shuswap project owned by Rink, Carmel Cove, has already been approved. Special financing has also been arranged to complete a condominium project in Kelowna as well as the West Beach RV park in the North Shuswap. Those will come next for creditor restructuring approval.
Ramsay said creditors are being asked to approve restructuring separately in each of the seven projects. If all are successful, Rink and his companies will avoid bankruptcy.