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Eron Lenders
Project Name: Caesars Lakeshore Estates Ltd.
Lender update
May 5, 2003
Further to our letter dated May 23, 2000, we are writing to provide you with a further update on the status of the above noted mortgage.
Project Status
In our last letter to you, with respect to Caesars Lakeshore Estates Ltd., we indicated that the property had been listed with Colliers for $8,000,000 and that several potential buyers had expressed an interest in the property, but no firm offers had been received.
In early 2001, new listing proposals were obtained from real estates firms in the Kelowna area and Premier Canadian Properties, an affiliate of Sotheby's International Realty, was selected as the listing agent with a list price of $5,250,000.
Although Premier Canadian Properties actively marketed the property throughout 2001 and 2002, the only offer received was in September 2002 for $2,200,000. This offer was countered at $5,000,000. The potential buyer then offered $3,000,000. In the meantime, an appraisal of the Caesars lands was commissioned, which indicated a market value of $3,024,000. This value was significantly below a 1997 appraisal value and the values suggested by the various real estates firms in the Kelowna area.
In early April 2003, the Judicial Trustee, the co-lender group, Caesar's Landing Estates Ltd., and the Caesar's Lending Committee, subject to court approval, accepted an offer of $3,500,000 plus GST for the property. The Court approval hearing took place on April 15, 2003, at which time another buyer surfaced and submitted a competing bid of $4,500,000 plus GST for the property. The original buyer had a Right of First Refusal clause in his offer, and decided to match the competing offer.
Closing of the sale took place on May 1, 2003. The Eron Lenders are entitled to 69.69% of the net sale proceeds with the other 30.31% going to the co-lender group. The Eron funds have been placed in an interest bearing trust account pending the court's approval of a distribution.
If Eron's records indicate your investment in Caesar's was held in a Registered Retirement Savings Plan (RRSP or RRIF), we have enclosed a separate letter outlining the four payment options available to you. Otherwise, for non-RRSP/RRIF investors, a cheque will be mailed to you at your address on file with the Judicial Trustee.
Estimated Time Line For Distribution
The Judicial Trustee must obtain Court approval before distributing any funds to the Eron investors. While it is difficult to accurately predict when the Court Order will be received, our best estimate is that the Court Order should be obtained by late May 2003. Once obtained, we will post an update to the Eron website (see below) and proceed with the distribution process. We anticipate the initial distribution of funds to the lenders should be completed by the end of June 2003.
Estimated Amount of Distribution
The Judicial Trustee's estimated recovery on your investment after deducting direct costs (including legal and Judicial Trustee fees, expenses such as property taxes), and an allocation for indirect costs, is 45%. For example, if your investment in the Caesars project was $10,000.00, your recovery will be approximately $4,500.00.
This will be an interim distribution and in keeping with past distribution Court orders, you will receive 60% of your estimated recovery or in the example above, $2,700.00.
Further distributions will be made at a later date, but are dependent on the accuracy of the estimate of indirect costs allocated to the Caesars project and the approval of the Court.
Lender Communications
We will continue to communicate directly with all lenders, however, we urge you to take advantage of the web site at http://www.eron-pwl.com for project specific updates as well as related court orders and other general information. If you need information on reclaiming tax on interest income in prior years, please call David Craig at (604) 713-6680.
Yours truly
Judicial Trustee
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