River Run investors reject proposal
A proposal put forward by Bridgecreek Development Corporation to a group of investors of the proposed River Run project has been soundly rejected.
At a special shareholders meeting held in Calgary on Jan. 16, investors in the “River Run Vistas” patch of the Blairmore property, voted strongly in favour of taking the project into their own hands.
Myron Achtman, new chairman of the steering committee representing about 90 Canadians who invested in River Run, told The Promoter the meeting was held to hear an update on the project and Bridgecreek’s proposal to attempt to seek new funding.
Crowsnest Pass Mayor John Irwin was also present at the meeting and spoke to investors on infrastructure and environmental issues.
During the meeting, Bridgecreek CEO Bill Bradley, told investors that the company had “raised 14 per cent of our goal when the economy tanked” and that the “mortgage proceeds have been spent”.
The group heard a total of $32m was raised and $17m was spent on the project. This was broken down as follows: $5m to Bighorn Mountain Resort in Canmore, $3.2m on “investor relations staff ” (sales commissions), $3.7m on marketing, legal and professional fees, $4.5m on accrued interest for carrying costs to investors, and $1.5m on engineers.
Bradley admitted that the $5m inter-company loan to the Bighorn project is “non-recoverable”.
The River Run Vistas group invested a total of $14m from early 2007 to early 2008. Bridgecreek defaulted on interest payments due from Oct. 1, 2008. The average amount invested is $156,000. Investors hold first mortgage on 67 lots. During the meeting, investors learned their $14m investment has been spent.
“The economy has rendered your mortgage non-performing,” said Bridgecreek’s Gabor Zinner.
Bradley and Zinner told investors they were in discussions with a lender and were looking for $2.5m to get the first phase of the project going and required $5m in security. They have hired Viceroy Homes and said they’ll “go ahead no matter what”.
River Run Vistas investors were offered to become limited partners whereby Bridgecreek would be the general partner and undertake management of the project and the limited partners would hold title to the land. This proposal includes pledging a certain amount of lots as security to the financing organization.
Achtman said a vote was taken with the group after the meeting and they voted overwhelmingly to “enforce the trustee to accelerate the process”.
Seventy-one shareholders voted with 67 voting to accelerate, three voting to waive and one voter undecided.
“We are not prepared to stand back,” said Achtman. “We are making a demand that he pays us back what he owes.”
Achtman explained this action consists of two options. First, the shareholders could decide to hold a judicial sale of the property and may recover a portion of their investment. The second option would be to foreclose on the property and take it back from Bridgecreek, thereby allowing them to develop it themselves.
“We’re leaning on [Bradley],” said Achtman. “There was very strong support to do this.”
Achtman said after the Jan. 16 meeting, River Run Vistas investors presented a letter to Bridgecreek with two conditions and a compliance deadline of Feb. 15 before they proceed with action. The first condition is that Bridgecreek pay an outstanding balance of $38,400 in legal fees owed to Olympia Trust. The second condition is that the company shows proof that all outstanding taxes and liens are paid.
The municipality is unable to provide an update of Bridgecreek’s property taxes to The Promoter without legal authorization from the landowner.
In a letter dated Feb. 4 from Bill Bradley to the steering committee, Bradley acknowledged the investors’ decision to accelerate the process and said “we view our relationship with the investors of the Vistas Lands to be terminated”.
Achtman said the Vistas group will now decide how they want to proceed.
To date, River Run Vistas investors’ group is the only group of the Blairmore project that has publicly voted on the issue.
An audio recording of the meeting was put on the Internet and can be found at http://www.feeltheenergy.ca/.
Note: Kudos to Joni MacFarlane for an ‘excellent’ and timely news story. Well done Joni!
Hopefully, a much needed and indepth follow up story will be forthcoming after some more ‘investigative journalism’ with respect to “where has all the money gone?”, and if Bridgecreek is in receipt of a Tax Notification (property tax arrears) from our municipality? And, especially, the extent of our elected members of council and municipality’s culpability in this whole sordid affair?
We must have accountability… head(s) need to roll!!