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 Burns Lake RCMP is investigating the incident. (Phil McLachlan photo)
Fatal collision between a pedestrian and train near Burns Lake

Police say the investigation is still ongoing

Stikine provincial election candidates (clockwise from top left): Nathan Cullen, NDP; Darcy Repen, Rural BC Party; Rod Taylor, Christian Heritage; and Gordon Sebastian, BC Liberals.
‘Where is Annita McPhee?’: Cullen under fire from opening salvo of all-candidates forum

Four Stikine candidates spar during online debate from Prestige Hudson Bay Lodge in Smithers

(Wet'suwet'en Access Point on Gidimt'en Territory Facebook screenshot)
Ceremony a right at proposed CGL pipeline drill site: BC Union of Indian Chiefs

Indigenous land defenders cannot be criminalized and targeted, argues UBCIC

(File graphic)
Man dies in Gitlaxt’aamiks (New Aiyansh) after being taken into police custody

IIO and BC Corners Service conducting independent investigations

Dan Stuart (Christian Heritage Party - BC photo)
Strong values underpin Christian Heritage Party candidate

He’s also suspicious of the COVID-19 pandemic

In this photo provided by Shannon Kiss, smoke from the CalWood Fire billows, Sunday, Oct. 18, 2020, as seen from Gunbarrel, Colo. (Shannon Kiss via AP)
‘First guys out:’ Western Canadian air tanker fleet busy despite drop in wildfires

CEO believes wildfires have become more dangerous in recent years as people live closer to where they start

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

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

A B.C. man decided to create a website to help people find family doctors accepting patients. Because Victoria is considered high-demand, clinic openings can’t be posted publicly. (Unsplash)
Vancouver Island man starts website that connects B.C. residents with doctors

Nanaimo man started project to help people find family physicians accepting patients

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Voting station at Tzeachten Hall in the riding of Chilliwack-Kent on the first day of advance voting in the provincial election on Oct. 15, 2020. (Paul Henderson/ Chilliwack Progress)
B.C. VOTES 2020: 380,000 British Columbians head to polls in first 4 days of advance voting

Some of highest voter turnout so far has been seen on Vancouver Island and in Shuswap

Grant and Barbara Howse, in quarantine in Invermere. Mike Turner photo
Denied entry into U.S., Kootenay couple still forced to quarantine for 2 weeks

The rules around crossing the U.S. border led to a bizarre situation for an Invermere couple

Fort St. John councillor Trevor Bolin (B.C. Conservative Party)
BC Conservatives leader fights back after BC Liberals leak 2018 workplace harassment case

Sexual harassment case was connected to employee being terminated, WorkSafeBC found

Most Read