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To the Lenders currently identified in Project #1155
Commonwealth Plaza
Borrower: 516421 British Columbia Ltd.
November 10, 1997
As indicated in our letter to lenders dated October 22, 1997 we will be providing information to lenders through regular project updates. Unfortunately, due to the poor quality of Eron's accounting and lender records we are presently unable to answer all the questions you may have. However, based on our initial findings we can address the frequently asked questions set out below. We stress that the information available to us is subject to verification and accordingly our findings are subject to change as more information becomes available.
What is the current status of the project ?
The property consists of two parcels in Victoria. The first is a development lot off Broad Street (lot 1) that is located behind the second lot, a two storey office building on View Street (lot C). The View Street property is only partially leased on the ground floor with the second floor being completely empty. The property is currently for sale. The mortgage is one month in arrears.
How much was supposed to be raised for the project ?
$700,000.
According to Eron's records how much was actually raised for the project ?
The records of Eron indicate that approximately $610,000 was raised for the Commonwealth Plaza project.
According to Eron's records how much was advanced to the project ?
This is unknown as the funds for this mortgage where never actually advanced to the borrower. There was a previous mortgage with this borrower on an adjacent lot and it appears that this mortgage was merely a reduction of the existing mortgage with a paydown made on the "old" mortgage and then moving the charge to a "new" mortgage.
What happened to the rest of the money ?
It is unknown as the full advance to the project can not be determined. Some of the funds were used by Eron to pay commissions and fees.
When will you know where my money went ?
It will be at least two months before we are able to account for all funds received by Eron.
What security was taken on the project ?
A 2nd mortgage in the amount of $700,000 over Lot C and Lot 1.
Are there any mortgages or other loans in priority to the project security ?
The following mortgages appear to have priority:
- A 1st mortgage held by Citizens Trust Company in the amount of $1,300,000 over Lot C and;
- A 1st mortgage held by Highland-Pacific Mortgage Corporation, Highland Park Mortgage Corporation, and White Shore Investments Ltd. for a combined charge of $400,000 on lot 1.
What is the value of the project ?
We have commissioned a valuation report of the property, which is to be received by the end of November, we prefer not to speculate on the value, rather we will advise you of the result of this report.
Are there any other security or guarantees which might increase recovery on the project ?
Elroy Fimrite is the Covenantor on this mortgage, however the value of this collateral is not yet known. We anticipate gathering this information by the end of November.
Will I get my money back ?
It is too early to tell definitively how much of your money will be recovered. However, at this early stage it appears unlikely that full recovery will be realized.
When will I get any money back ?
It is likely to be many months before any money is available to investors.
We caution you that the information available to us is still incomplete and limited in scope. Nothing in the foregoing should be construed as guaranteeing any return of funds. We will keep you informed on a regular basis and will issue a further project update on or about November 30.
In the meantime if you have any further questions or information concerning the project please contact us in writing at the above noted address or by fax at (604) 688-6128, clearly marking correspondence as relating to the "Commonwealth Project".
Yours truly
Price Waterhouse Limited
Judicial Trustee
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