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Eron Lenders
Project Name: #1189 - Morewood
Lender update
March 23, 1998
Further to our letter dated December 5, 1997 we are writing to update you on the status of the above noted mortgage.
Project Status
In our last letter to you with respect to Morewood we had advised you that North Shore Associates (the "Borrower") would be seeking a deferral of payment of funds outstanding for a period of twelve months, on a no interest basis. It was agreed in December that a deferral would be acceptable however we would require interest payments and some payment up front.
We have been in negotiations with the Borrower, who made an offer in mid December 1997 of US $2,095,470. We countered this settlement offer at US $2,686,500 representing the total outstanding liability of the Borrower as of the date that Eron Mortgage Corporation committed a default under the loan agreement. The Borrower raised their settlement offer to US $2,336,820 (approximately 88% of the Borrowers liability) in the last week of December. Since December we have been in constant contact with Cedaridge Development and Management ("Cedaridge"), an equity partner in North Shore Associates as well as Pearson partners Inc. ("Pearson"), another equity partner in North Shore Associates.
We attended a meeting in New York with both Cedaridge and Pearson in February 1998 and were successful in moving the settlement amount to $2,635,000 US or approximately 98% of the outstanding liability. We caution you that due to over funding and interest accruals you will not receive 98% of the money that is owed to you.
We were also successful in negotiating a full release from the Borrower with respect to the allegations of lender default raised by the Borrower's legal counsel.
The final closing and payment of the settlement amount took place on March 13, 1998.
We have conducted the activities, set out above, based on the information presently available.
Distribution Issues
Now that we have received funds with respect to Morewood we anticipate that you are wondering when you will receive your funds. We are required to make an application to the Court to make a distribution to you, this process is currently underway, however we anticipate that it will take as much as six to eight weeks to be resolved.
Approximately Cdn $1,200,000 of the funds and investors in Morewood were assigned from Eron Investment Corporation ("EIC") and the distribution issues will not be finalized until such time as the EIC issues are ruled upon by the Court.
Lender Communications
As you are probably aware we have a web site at http://www.eron-pwl.com. On this site you will find project specific updates as well as related court orders and other general information.
While 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 plan to issue another letter as soon as we have significant new information with respect to the distribution. In the meantime, if you have any specific questions or information concerning the project 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 Morewood - Project Lead.
Yours truly,
Judicial Trustee
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