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Eron Lenders
Project Name: # 1139 - South Thompson Guest Ranch
WEB/VMX - Box # 2161
Lender update
January 21, 1998
This is a Country Inn in Kamloops, BC. The Inn has 48 rooms and its main source of revenue is from European bus tour groups travelling between Vancouver and Calgary. The ranch is presently being operated by Dr. Herb Battrum (sole director and officer, owner and 4th mortgagee). The operations have been scaled down as the winter period is the off season. Activity will ramp up again in the Spring.
The Judicial Trustee holds a fifth mortgage with a face value of $3.5 million. The prior charges on the property are approximately $2.2 million. Our mortgage is in default and the accounting has just completed. The accounting indicates only $1.1 million was advanced to the project, with accrued interest the total outstanding amount is approximately $1.7 million. We are in the process of issuing our demand notices. In addition, we are reviewing the validity and enforceability of the prior charges.
Eron Mortgage Corporation (EMC) held the only outstanding share of 485955 BC Ltd. operating as South Thompson Guest Ranch, which share was held in trust as follows:
- 74% on behalf of EMC
- 26% on behalf of Dr. Battrum
In late November, Dr. Battrum issued 100 Common shares to himself without serving any notice to EMC or to Price Waterhouse Limited. The net effect of the share issue was to effectively dilute EMC's equity interest in the STGR from 74% to what amounts to .73%.
We are in the process of seeking to rescind this share issue transaction.
A recently commissioned appraisal indicated that there may be some nominal value for the participants in the fifth mortgage.
We have received expressions of interest from other hotel operators and tour companies, who are interested in looking at STGR as a potential opportunity. At this time these interests are preliminary in nature. We will keep you advised of any further developments as they take place.
Yours truly
Judicial Trustee
Eron Lenders
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