A Mountain Equipment Coop, MEC, sign is seen on a store front in Montreal on Tuesday, June 18, 2019. THE CANADIAN PRESS/Paul Chiasson

Struggling outdoor equipment retailer MEC opposes efforts to pause sale to Kingswood

MEC said it’s urgent for the sale to close before the retailer sees ‘significant weekly cash flow losses’

Beleaguered outdoor recreation retailer Mountain Equipment Co-op is opposing a proposed delay of the company’s sale to a U.S. private investment firm, saying there is “significant urgency” to closing the deal.

Kevin Harding with the Save MEC campaign filed an application in a B.C. court last week to adjourn the sale to California-based Kingswood Capital Management, part of an effort to preserve the retailer’s status as a co-operative.

The group said it wants to “explore alternative options to address MEC’s liquidity issues,” including selling real estate, obtaining operating loans and bringing in a credit card rewards program.

In a response filed Monday, the company doubted the group’s ability to address MEC’s cash flow issues, noting that the proposed sources of potential funding don’t involve “concrete commitments or realistic options.”

The Vancouver-based company said given the number of factors that need to be addressed before the sale closes, including negotiations with landlords, the proposed adjournment would put the deal in jeopardy.

MEC said it’s urgent for the sale to close before the retailer experiences “significant weekly cash flow losses,” which may worsen with rising COVID-19 rates.

“The transaction has to close in a timely manner before MEC’s forecasted losses escalate and in order for the purchaser to take advantage of the upcoming holiday sales periods,” MEC said in the court filing.

The company added that MEC’s other stakeholders, including its employees, would be “unfairly prejudiced” by the proposed adjournment, as there is a “real risk” that a delay could lead to the closure of MEC’s operations.

The retailer, which specializes in outdoor equipment and clothing, has 1,143 active workers with the majority located in British Columbia, Ontario and Alberta, according to the first report of the monitor on Sept. 24.

The 49-year-old retailer traces its roots back to a group of west coast mountaineers, who came up with the idea of opening a Canadian outdoor recreation store on a climbing trip to Mount Baker, Wash.

The grassroots co-operative officially launched in 1971 with six members and about $65 of operating capital.

MEC now has roughly 5.8 million members, according to court documents. Members pay a one-time membership fee of $5, which entitles them to one share in the co-op and the right to shop at MEC.

On Sept. 14, after struggling with sluggish sales, inventory issues and increasing online competition, the company filed for creditor protection and announced its sale to a Canadian subsidiary of Los Angeles-based Kingswood.

While the move came as a surprise to members, the outdoor gear and equipment retail space has become increasingly crowded in recent years.

In June, Canadian outdoor retailer Sail Outdoors Inc. filed for bankruptcy protection in order to restructure amid the COVID-19 pandemic.

However, as a member-owned co-operative, the group Save MEC has argued the store’s sale should require their approval.

A petition against the deal had garnered 140,000 signatures by Tuesday, and the group is continuing to work on an alternative to selling the retailer.

“We’ve been in discussions with lenders and other parties, and we currently have expressions of interest surpassing $100 million in value,” Elliot Hegel, a spokesman for Save MEC, said Tuesday.

“We’re asking for a fair chance to save our co-op.”

He said the group isn’t surprised by MEC’s opposition to the request for a two-week delay to proceedings.

“Throughout this whole process we have seen that MEC and the board have been unwilling to involve the member-owners in discussions about the future of our co-op,” Hegel said. “The members were not even informed of MEC’s financial troubles, let alone the sale of the co-op’s assets to Kingswood.”

The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The Comox Valley Hospice Society recently received a generous donation from a personal donor to help fill a fundraising gap created by COVID-19. ADOBE STOCK IMAGE
Comox Valley Hospice Society receives significant donation

CVHS is facing a fundraising shortage created by the pandemic

Comox Lake is the drinking water source for much of the Comox Valley. File photo
WATER WISE: Healthy watersheds should be a priority for all political parties

Do you know where your party of choice stands on the subject of clean water?

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

With local MLA Adam Olsen looking on, BC Greens leader Sonia Furstenau said a Green government would convert BC Ferries into a Crown corporation Wolf Depner/News Staff)
Green leader Sonia Furstenau promises to convert BC Ferries back into Crown corporation

Promise comes Monday afternoon with five days left in campaign

A passer-by walks past a COVID-19 testing clinic in Montreal, Friday, Oct. 16, 2020. THE CANADIAN PRESS/Ryan Remiorz
Canada ‘yet to see’ deaths due to recent COVID surge as cases hit 200,000

Much of the increase in case numbers can be attributed to Ontario and Quebec

Police confirm human remains were found in a recycling bin in Vancouver on Oct. 18, 2020. (Black Press Media file photo)
Human remains found in recycling bin floating near Vancouver beach

Police asking nearby residents to see if their recycling bin has gone missing

(File photo)
RCMP: Two men face charges in reported Parksville fatal hit-and-run

Investigation into man’s death began in August of 2019

The Comox Valley Glacier Kings sit third in the VIJHL North Division with six points, one behind the Oceanside Generals. The Yetis face the division-leading Campbell River Storm in a home and home this weekend. File photo
Comox Valley Glacier Kings win three of first six games

Six games into the 2020/21 Vancouver Island Junior Hockey League season, the… Continue reading

B.C. Liberal leader Andrew Wilkinson visits a North Vancouver daycare to announce his party’s election promises for child care, Oct. 9, 2020. (B.C. Liberal Party video)
B.C. parties pitch costly child care programs in pandemic

B.C. Liberals say they’ll deliver on NDP’s $10-a-day promise for lower-income families

Most Read