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

Environment Canada has issued a snow warning for the Kootenays on Friday. File photo
Environment Canada issues snow warning for Friday

Two-to-10 centimetres is expected to fall

Brody Peterson told The Gazette he intends to dispute tickets issued by Grand Forks RCMP at his backyard “house warming” Saturday, Oct. 10. Photo: Laurie Tritschler
Homeowner intends to dispute COVID tickets after backyard party near Grand Forks

Brody Peterson said bands that played at his home shut down before the 11 o’clock cut off

A glimpse of some of the 480 (approx) cars written off as a result of the acid spills along the Trail highway in 2018. Photo: Trail Times
Trail Ford dealer’s frustration grows with ICBC

Trail AM Ford owner Dan Ashman says he just wants fair compensation from ICBC

Kootenay West Candidates (L to R) Glen Byle (Conservative), Katrine Conroy (NDP), Andrew Duncan (Green), Corbin Kelley (Liberal), Fletcher Quince (Independent, Ed Varney (Independent).
Q&A with Kootenay West candidates: Opioid crisis

Seventh in a series of Q&As with the candidates, look for a new set each morning.

Touchstones Museum has opened up Nelson’s Cold War bunker to the public. The unique exhibit includes artifacts from the 1950s and 60s. Photo: Tyler Harper
Take cover! Cold War bunker opens to public in Nelson

The shelter was built in 1964 in case of nuclear fallout

Provincial health officer Dr. Bonnie Henry presents modelling of COVID-19 spread in B.C., March 25, 2020. (B.C. government photo)
B.C. sets another COVID-19 record with 203 new cases

up to 1,766 active cases in B.C., two more deaths

Liberal Leader Andrew Wilkinson speaks during a drive-in car rally campaign stop at a tour bus operator, in Delta, B.C., on October 17, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. Liberal Leader maintains confidence as campaign tests party identity

Liberal campaign has been disrupted by controversy

RCMP. (Phil McLachlan - Black Press Media)
British Columbia man dies during ski trip near glacier west of Calgary

Kananaskis Public Safety and Alpine Helicopters responded around 2:30 p.m.

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Prime Minister Justin Trudeau arrives on Parliament Hill in Ottawa on Monday, Oct. 19, 2020, following a week-long break for the House of Commons. THE CANADIAN PRESS/Sean Kilpatrick
One crisis after another for Trudeau since last federal election one year ago

It has been a year of unprecedented calamity and crisis

Rio Tinto Alcan’s aluminum smelter at Kitimat competes against producers in the Middle East and Russia that have no carbon tax. (Rio Tinto)
B.C. carbon tax highest in Canada, export industries unprotected

B.C. NDP, B.C. Liberals say they’re looking at exemptions

(Pixabay)
Vancouver teacher suspended after swearing, touching students and complimenting underwear

McCabe touched students, including rubbing their backs and necks, touching their hair and hugging them

Jack Vellutini, 100, is still making sweet music. Photo: Submitted
Music stirs memories as Trail serenader nears 101st birthday

Jack Vellutini gave his brass instruments to Trail up-and-comers so the legacy of music can live on

Most Read