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To Lenders of Eron Investment Corporation ("EIC") - March 17, 1998
Eron Investment Corporation ("EIC")
Eron Mortgage Corporation ("EMC") and Bare Trustee Companies for which Price Waterhouse Limited ("PWL") has been substituted as Judicial Trustee
Dear Lender
At the General Meeting of EMC Lenders held on February 7, 1998, we outlined our recommendation that lenders who originally had invested into EIC, and were subsequently allocated to other Eron-related loans, should be pooled from the underlying loans to an EIC pool. We also informed the lenders that a listing of EIC lenders would be compiled and each affected lender would be notified.
We have now reviewed all the Eron-related loans and compiled a lender listing of individuals who had originally invested into EIC. This letter is to advise you that our records indicate that one or more of your investments was originally an EIC investment. This investment was then subsequently transferred to a specific Eron-related loan. Enclosed is a schedule that indicates your original investment with EIC and to which loan the investment has been subsequently allocated.
We believe that EMC's process of allocating EIC lenders to underlying Eron-related loans may have been flawed. Therefore, to be fair and equitable to all affected parties, we believe that the EIC allocation process should be reversed. This reversal process would encompass moving all the EIC allocated lenders back to EIC. EIC would participate in the underlying loans in the amount of the actual funds advanced to the specific projects. Funds received by EIC for its participation in the underlying loans would be pooled and distributed on a prorata basis to all lenders in the EIC pool.
The reversal process outlined above is what we currently believe to be the fairest process available to all affected parties. It should be noted that prior to us taking any action, we would first have to express the facts and issues to the Court and receive formal approval. Prior to this we are seeking input from all lenders who will be affected by the final decision.
Our records currently indicate that there are approximately 529 EIC investments representing 424 different lenders. EIC lender's equity is approximately $20.5 million.
PWL has scheduled an EIC lender meeting for 6:30 pm, Wednesday , April 8, 1998, to be held at the Vancouver Trade & Convention Centre, Ballroom B, located at 999 Canada Place, Vancouver. At this meeting PWL will provide the following information:
- a history of EIC and EMC's allocation process;
- why PWL believes the EIC allocation was flawed and why it should be reversed;
- how PWL plans to complete the reversal process and the affect on EIC lenders;
- the Court approval process;
- the way forward - how to realize on EIC's underlying investments, and
- a summary of EIC's investments in Eron-related loans.
This meeting will allow the EIC lenders a forum to express their concerns and questions to PWL. The meeting will also enable the lenders to have an election of an EIC steering committee. We note that immediately following this meeting there will be a general meeting for lenders who were not part of EIC but who may be affected by the decision regarding EIC.
We refer you to our web site at http://www.eron-pwl.com. On this site you will find specific updates regarding EIC as well as related court orders. We will continue to communicate directly with all lenders. We urge you to take advantage of the web site so that you can receive first hand current information from PWL in the most cost effective manner we have available.
We will issue another letter as soon as we have significant new information to report. In the meantime, if you have any specific questions or information concerning EIC please contact us in writing at 500 - 1380 Burrard Street, Vancouver, BC, V6Z 2H3 or by fax at (604) 688-6128 marked to the attention of EIC - Project Lead.
Yours very truly
Judicial Trustee
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