Medicine Hat-based part owners of the Copper Coulee Casino at the Medicine Hat Lodge are asking the court to give them full control of the casino -not the hotel - while ongoing receivership proceedings over the hotel ownership continue with Mayfield Investments.--NEWS PHOTO BRENDAN MILLER
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Local interests attempting to gain full control of the Copper Coulee Casino told a court hearing they are being blocked from exercising their rights to buy it outright during the court-ordered restructuring of another business partner.
Medicine Hat businessman Albert Stark and Canalta Hotels group owner Cam Christianson each own 25 per cent of the shares in the Copper Coulee Casino, with the remainder owned by Mayfield Investments.
That company also owns the Medicine Hat Lodge, where the casino is located, but is now under creditor protection after defaulting on more than $30 million in loans to ATB.
A receiver is preparing to sell Mayfield assets to clear up debts, a Court of King’s bench hearing in Edmonton heard Monday, but lawyers for Stark and Christianson argued that such a sale shouldn’t include the casino and they should be allowed to buy out Mayfield’s share under the terms of the overall partnership agreement.
That represents a more straight-forward solution that recovers some amount for creditors and doesn’t disadvantage the local partners, said Terry Czechowskyj, of the firm Miles Davison, representing Stark.
“They will get a greater value (from my clients) than at market selling half (a company) into a convoluted factual matrix,” said
Czechowskyj, stating the potential of a new buyer’s appetite to enter into a 50-50 partnership with brand new partners is unclear, other than to block a potential relocation of the casino.
Justice J. Dunlop will release his decision at a later date.
Receiver, Ernst and Young, argued that businesses should not be allowed to remove or devalue a company’s assets, sometimes known as the estate, as it is about to enter receivership.
That disadvantages creditors as a whole, argued attorney Kelly Bourassa, of Blake, Cassels & Graydon, representing Ernst and Young.
“It is the ability and responsibility of the receiver to maximize the value of the estate,” she said. “The view is there may be the opportunity … to fully engage the market to determine the value.”
The matter was brought to court in late August by ATB, but it was stayed so Mayfield could attempt to complete an alternate financing agreement.
That process ended with no agreement by an Oct. 31 deadline, and the court creditors action proceeded. There is some dispute about dates among the parties regarding option dates, though lawyers for Stark and Christianson said their clients have made it clear they intend to acquire the shares.
“The value of the hotel is involved in some way to the casino,” said David Corrigan, of HMC Lawyers of Calgary, representing Christianson.
He cited increased room occupancy and restaurant sales as well as lease payments from having the casino on site of the Lodge to the hotel owners.
“The receiver knows, and ATB knows … that if anyone is buying the hotel they want some way to keep the casino there,” said Corrigan.
“The long-term attempt here is to accept a joint offer (for both the lodge property and casino shares), because there is no way someone will offer to buy a run-down hotel without a casino.”
The two men, acting as partners, worked out an agreement with Mayfield when they acquired shares in 2017, and that “unanimous shareholders agreement” should be honoured, their lawyers said.
It was also sealed to the public by the courts on Monday, along with several affidavits, and other documents as applicants ruled they contained commercially sensitive information.
This month, E&Y told court in an monitor’s report that it plans to offer a sales process beginning in May for all assets, including the Lodge, Copper Coulee shares, and the Camrose Regional Hotel and related casino in that city.
Court documents state the receiver has met payroll at the facilities and enacted several repair projects that will improve operations and add value during the sales process.
That is proposed to begin this fall and scheduled to conclude with a transaction in August.
