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 help 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 company added there is a “real risk” that a delay could lead to the closure of MEC’s operations.
“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 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 during a climbing trip to Mount Baker, Wash.
The grassroots co-operative officially launched in 1971 with six members and about $65 of operating capital.
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