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

NDP headquarters on election night, Oct. 24, 2020. (Katya Slepian/Black Press Media)
ELECTION 2020: Live blog from B.C. party headquarters

BC NDP projected to win majority government – but celebrations will look different this election

North Coast BC NDP MLA Incumbent is seen with her wife Andrea Wilmot and their son Lua, as well as their dog Duncan. Preliminary results on election night Oct. 24 show Rice is in for a third term. (Photo: K-J Millar/The Northern View)
Jennifer Rice is North Coast MLA for third term

Preliminary election results show NDP Majority government

B.C. Green Party leader Sonia Furstenau outlines her party's climate action platform at Nanaimo's Vancouver Island Conference Centre earlier this month. (News Bulletin file photo)
Green leader Furstenau declared victor in her home riding on Vancouver Island

Cowichan Valley voters elect freshly minted party leader for her second term

John Horgan has been re-elected the MLA for Langford-Juan de Fuca. (File-Black Press)
Horgan trounces challengers to be re-elected in his Vancouver Island riding

MLA has represented constituency of Langford-Juan de Fuca and its predecessors since 2005

DriveBC webcam shot of Highway 20 near Anahim Lake Friday, Oct. 23 at 11:30 a.m. shows snow-covered roads. A travel advisory is in effect. (DriveBC webcam image)
Travel advisory in effect for Highway 20 from Williams Lake west to Firvale

Winter driving conditions continue to have an impact

NDP Leader John Horgan celebrates his election win in the British Columbia provincial election in downtown Vancouver, B.C., Saturday, Oct. 24, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan celebrates projected majority NDP government, but no deadline for $1,000 deposit

Premier-elect says majority government will allow him to tackle issues across all of B.C.

FILE – Prime Minister Justin Trudeau greets Premier John Horgan during a press conference at the BC Transit corporate office following an announcement about new investments to improve transit for citizens in the province while in Victoria on Thursday, July 18, 2019. THE CANADIAN PRESS/Chad Hipolito
Trudeau congratulates Horgan on NDP’s election victory in British Columbia

Final count won’t be available for three weeks due to the record number of 525,000 ballots cast by mail

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

Provincial Green Party leader Sonia Furstenau speaks at Provincial Green Party headquarters at the Delta Victoria Ocean Pointe in Victoria. (Arnold Lim / Black Press)
VIDEO: Furstenau leads BC Greens to win first riding outside of Vancouver Island

Sonia Furstenau became leader of BC Greens one week before snap election was called

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

NDP Leader John Horgan elbow bumps NDP candidate Coquitlam-Burke Mountain candidate Fin Donnelly following a seniors round table in Coquitlam, B.C., Tuesday, October 20, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan, NDP head for majority in B.C. election results

Record number of mail-in ballots may shift results

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

Canada’s Chief Public Health Officer Theresa Tam responds to a question during a news conference Friday October 23, 2020 in Ottawa. Canada’s top physician says she fears the number of COVID-19 hospitalizations and deaths may increase in the coming weeks as the second wave continues to drive the death toll toward 10,000. THE CANADIAN PRESS/Adrian Wyld
Canada’s top doctor warns severe illness likely to rise, trailing spike in COVID-19 cases

Average daily deaths from virus reached 23 over the past seven days, up from six deaths six weeks ago

Most Read