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Eron Lenders
Project Name: Petrochemical Building
Lender update
30 March 2000
Further to our letter dated April 2, 1998, 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 the Petrochemical Building we indicated that an extension agreement had been negotiated which included a provision for the repayment of the Petrochemical Building mortgage by no later than July 1, 1998. Needless to say, repayment did not occur by this date.
A foreclosure action was commenced when repayment did not occur. The borrower requested and negotiations began on a second extension of the mortgage. On June 9, 1999, an extension agreement was signed extending the mortgage to November 30, 1999. In return, the borrower agreed to pay interest monthly for the period June 1, 1999 to November 30, 1999, make a lump sum payment of $125,000 against past due interest, pay an extension fee of $15,000 and bring property taxes current on the building. The mortgage was to be paid out on December 1, 1999. The total payments received were $217,246.
In late December, after once again threatening foreclosure, the borrower delivered to the Judicial Trustee an offer of Purchase and Sale on the building, subject to certain conditions, to close on February 28, 2000. The buyer, Maxim Development Group Inc. was prepared to pay $2,700,000 to purchase the building, subject to the Petrochemical Building mortgage being extended for six months to August 31, 2000. A $200,000 deposit was to be made of which $125,000 would go to reduce the principal of the mortgage and the balance paid as commission on the sale. The buyer would pay interest monthly at an 8% annual rate and 1/12 of the current annual property taxes. Interest on the mortgage for December 1999, January and February 2000 was to be forgiven.
Your Lenders' Committee and the Judicial Trustee agreed to the extension, but not on the terms proposed by the borrower and the buyer. While negotiations were underway, the buyer offered to repay the mortgage including all outstanding interest on February 28, 2000 less a $300,000 discount fee. Considering the uncertainty of repayment of the mortgage in August 2000, your Lenders' Committee and the Judicial Trustee agreed that prepayment was attractive, but only at a discount of $100,000. The buyer finally agreed, and on February 28, 2000 the sale closed and the Judicial Trustee received $2,000,823.60 in full settlement of the Petrochemical Building mortgage, plus $5,000 as the balance of the extension fee owing from the second extension. These funds together with the funds from the second extension agreement are being held in an interest bearing trust account pending an application to the Court to approve distribution.
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. We would also encourage you to contact your Lender Lead, Sandy Best at (604) 572-8306 for updates on the Petrochemical Building project. If your enquiry is of a general nature, you should contact James Tindle of the Eron Lenders Committee at (604) 438-0915.
Yours truly,
Judicial Trustee
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