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Winnipeg Free Press - PRINT EDITION
Hecla Resort has new owner
Court approves Lakeview's bid
A Manitoba Queen's Bench court has conditionally approved the sale of Hecla Resort to Lakeview Management.
The Lake Winnipeg resort has been in receivership for two years and while there may be a new owner approved by the court, there are significant hurdles to overcome before it can reopen.
Lakeview must negotiate a land lease with the province, as the resort is located in Hecla/Grindstone Provincial Park. There are also repairs required to get the property into shape.
"We're up for the challenge," said Lakeview's Keith Levit. "It will be a considerable job to get the hotel back up and running but we are confident we can do it."
Lakeview is the largest hotel operator in Manitoba. Through its private management company and its publicly owned Lakeview Hotel REIT, it manages 42 hotels across the country, including the Lakeview Resort and Conference Centre in Gimli.
"We believe the synergies (between the Gimli and Hecla properties) will be significant," Levit said.
Lakeview is in the process of building the Grand Hotel beside the new airport terminal and Levit said his company has package plans in the works to attract people to Hecla Resort.
He said room rates at Hecla will start lower than those at Gimli in the hopes of attracting families. The previous operators had positioned Hecla as more of a high-end property.
Lakeview hopes to have the deal closed by mid-December and have the resort operational by April.
There may be other challenges to overcome, such as a potential legal appeal of the court decision by Paletta & Company Hotels Ltd.
Paletta is the previous owner of the resort and placed the property in receivership. It's in a legal battle with the province and the Business Development Bank of Canada (BDC), the secured creditors of the property.
Joe Paletta said, "We are the largest creditor. We are not going away."
Paletta said he is owed about $19.5 million, and that's not counting lost revenue he would have earned through time-share condos he was in the process of developing or revenue from a wellness centre he was also about to establish on the property.
Irrespective of the Paletta dispute, the two-year-long receivership has been problematic and costly.
Although the resort's 18-hole golf course continued to operate this year (at a loss), its pro shop was vandalized and destroyed by fire. That, as well as burst pipes in the resort earlier this year caused a total of $500,000 in damage. The year before, it also sustained $500,000 in damage.
The real estate marketing firm retained to solicit offers two years ago originally listed the property at $6.5 million. That price was cut in half and it's likely Lakeview's offer -- the details of which have been sealed by the court -- was much less than that.
In the receiver's report filed in October it was noted that the BDC, which has been financing the receivership, was not willing to pay the $316,000 cost required to maintain the facility from Nov. 1, 2012 to April 30, 2013.
Republished from the Winnipeg Free Press print edition November 21, 2012 B6
History
Updated on Wednesday, November 21, 2012 at 12:02 PM CST: Fixes typo.
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