It's taken almost 15 years, but the receiver handling the liquidation of Crocus Investment Fund holdings has finally sold off its holdings in Canad Corporation Ltd., the owners of Canad Inns.
According to the 56th quarterly report filed by the receiver late last month, the fund has about $4 million in additional cash on hand than it did after the receiver's report of Sept. 30, 2019. In the June 30, 2019 report Deloitte indicated that, "The receiver and Canad reached an agreement in principle" after undertaking a judicially assisted dispute resolution.
The approximately $4 million Crocus received for its shares in Canad Corp. is less than the $5 million it originally invested in 1999 for a 16 per cent cent stake in the company.
The labour sponsored venture capital fund was thrown into a crisis after a major valuation write down and a crisis in confidence from its board in 2005 and was placed in receivership at that time.
Brent Warga, a senior vice-president and partner with Deloitte, the professional services firm that has been acting as the Crocus receiver for the last 14 and a half years, said he was not at liberty to disclose anything that is not in the quarterly reports.
Deloitte has received more than $9 million in receiver and manager fees since taking over management of the fund at the end of June, 2005. in addition to liquidating holdings in about 40 companies it has also organized three cash distributions to Crocus shareholders totalling $72.3 million and distributed another $7.5 million from class action settlements.
Acting on behalf of Crocus, Deloitte has been battling it out in court with Canad Inns for a few years. Among other things the receiver has claimed Canad Inn was acting in a manner that was oppressive of or unfairly prejudicial to Crocus. Through the course of that litigation, the Crocus receivers at one time asked the court to force Canad Corp. to liquidate its assets so that the proceeds could be distributed to Crocus and any other shareholders.
With the disposition of its Canad Corp. holdings, there are only four investments left on the Crocus books valued at less than $1 million -- Novra Technologies Inc., Genesys Ventures Inc., Manitoba Science & Technology Fund and an entity called ST Partnership -- although the original equity cost for those investments totalled more than $4 million.
In the case of Novra, the original investment was in both debt and equity and most of the debt portion has been paid back. Up until June 30, 2019, the receiver had stated that the final debt payment was due Sept. 1, 2019. But in the Sept. 30, 2019 quarterly report the final payment date was changed to Sept. 1, 2020.
Warga said, "All I can say is that the agreement was a little unclear. We went through the terms and conditions of it and in fact, the final interest instalment is due Sept.1 2020,"
Harris Liontas, the CEO of Novra said Crocus still owns about 3 million shares in Novra, a publicly traded company with shares trading on Monday at about 13 cents.
As for the Manitoba Science & Technology Fund, there does not seem to be much certainty from either the receiver or the one of the original fund architects as to when the Crocus stake would be liquidated. The M.S. & T. fund owns shares in some companies that Crocus has separate holdings in.
In the receiver's Dec. 31, 2019 report it states that regarding M.S. & T., interrelationships and liquidity issues with some of the holdings that are publicly traded but do not enjoy robust market trading is making winding down those holdings challenging.
Albert Friesen, the CEO of Medicure Inc. who helped create the M.S. & T. Fund and has had a hand in the creation of a handful of other companies that the fund invested in, agreed with the receiver's analysis that "the timing of a complete disposition is unknown."
But Friesen said it is not the case that there is any on-going dispute or fundamental disagreement with the Crocus receivers from Deloitte.
"I think they are just waiting to see how things might turn out," Friesen said.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.