All in West! Capital Corporation Announces Sale of Days Inn Hotel in Hinton, Alberta
June 05 2012 - 2:45PM
PR Newswire (Canada)
WINNIPEG, June 7, 2012 /CNW/ - All in West! Capital Corporation
(the "Corporation") announced today that it has agreed to sell the
the Days Inn hotel located in Hinton, Alberta (the "Days Inn
Hinton") to Lexor Management Inc. ("Lexor") in consideration for
the settlement of the outstanding mortgage indebtedness owed to
Lexor in the amount of $4,224,888, and subject to standard closing
adjustments (the "Transaction"). The Days Inn Hinton has been
appraised by an independent third party appraiser at $3.0 million
as at March 31, 2012. Lexor has agreed to accept the transfer
of the Days Inn Hinton in full satisfaction of the $4,224,888 owed
to it under the mortgage loan. Although the amount owing
under the mortgage loan relating to the Days Inn Hinton exceeds the
appraised value of the property by approximately $1.2 million,
Lexor has agreed to provide a full release of the Corporation and
its subsidiaries with respect to the balance owing under such
mortgage loan. The Transaction was unanimously approved by the
independent directors of the Corporation. Mr. Cornelius
Martens, Chief Executive Officer of the Corporation, abstained from
voting in respect of the approval of the Transaction due to the
fact that the principal director, officer and shareholder of Lexor
is Mr. Peter Schiller, his son-in-law. Lexor also manages the
day-to-day affairs of the Corporation's hotel properties. To the
extent that the Transaction may be considered to be a related party
transaction, the Corporation will rely on the "financial hardship
exemption" from the minority shareholder approval requirement as a
result of the satisfaction of the following conditions: (a) the
Corporation is insolvent or in serious financial difficulty; (b)
the Transaction is designed to improve the financial position of
the Corporation; (c) the Transaction is not made pursuant to a
bankruptcy proceeding; (d) the Corporation has four independent
directors in respect of the Transaction (Mr. Cornelius Martens
declared a conflict of interest due to his relationship with Mr.
Peter Schiller); (e) the board of directors of the Corporation,
acting in good faith, determined, and all of the Corporation's
independent directors, acting in good faith, determined that: (i)
paragraphs (a) and (b) above apply; and (ii) the terms of the
Transaction are reasonable in the circumstances of the Corporation.
The Transaction is scheduled to close on June 15, 2012 and is
subject to receipt of TSXV approval. While the Transaction will
improve the financial condition of the Corporation, the Corporation
will continue to negotiate with and consider available alternatives
with respect to its other creditors. The Corporation
continues to be in default of all of its debt obligations, which
include the following defaults: (i) the Corporation is in default
of its obligation to repay the principal amount on the Series A
convertible debentures (the "Series A Debentures") in the aggregate
principal amount of $6,495,000 on March 31, 2012, the maturity date
of the Series A Debentures; (ii) the Corporation is in default of
its obligation to make monthly interest payments on the Series A
Debentures from April 30, 2010 to March 31, 2012, the maturity date
of the Series A Debentures. The Corporation ceased monthly interest
payments on April 30, 2010; (iii) the Corporation is in default of
its obligation to pay interest on the Series B convertible
debentures (the "Series B Debentures") which mature on September
30, 2012. The Corporation ceased monthly interest payments on April
30, 2010. The holders of Series B Debentures are entitled to
instruct that the indenture trustee for the Series B Debentures
demand repayment of the aggregate principal amount of the Series B
Debentures ($1,180,000) plus accrued and unpaid interest; (iv) the
Corporation is in default of its obligation to pay interest
relating to its Series C senior convertible debentures (the "Series
C Debentures") which mature on October 1, 2012. The Corporation
ceased monthly interest payments on November 30, 2010. The holders
of Series C Debentures are entitled to instruct that the indenture
trustee for the Series C Debentures demand repayment of the
aggregate principal amount of the Series C Debentures ($2,353,750)
plus accrued and unpaid interest; (v) the Corporation is in default
of its obligation to make principal and interest payments to the
mortgagee under its mortgage financing and security documents
relating to the Econolodge Inn and Suites in Hinton, Alberta. The
outstanding mortgage balance is currently $6,494,820; and (vi) as a
result of the defaults noted above, the Corporation is in breach of
the "cross-default" covenants under its mortgage financing and
security documents relating to the Phase I and Phase II Best
Western hotels in Grande Cache, Alberta. The outstanding mortgage
balances for such properties are currently $7,826,983 in respect of
the Phase I property and $4,702,513 in respect of the Phase II
property. The Corporation is in ongoing discussions with its
mortgage lenders regarding the defaults under its mortgage
indebtedness and potential restructuring of such
indebtedness. The Corporation is continuing to evaluate
alternatives available to it. The Corporation has formed a
special committee which is considering the Corporation's
alternatives specifically as it relates to its outstanding
convertible debentures with a view to making a recommendation to
the Corporation's board of directors. The TSX Venture Exchange has
not reviewed or approved the contents of this press release.
Forward-Looking Statements This press release contains
forward-looking statements regarding the proposed transaction
involving the Days Inn located in Hinton, Alberta. There can
be no assurance that the proposed transaction will be completed on
the terms described herein or at all. All in West! Capital
Corporation CONTACT: Mr. Cornelius Martens, President and Chief
Executive Officer, orCornelius William Martens, Investor Relations,
Tel: (204) 947-1200
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