Bear Mountain Bargain

For just $400 million, Langford’s resort development could have been yours

Documents posted to—and quickly removed from—a local property developer’s website last week offered a fleeting glimpse into the financial workings of the Bear Mountain Resort development.

While observers have recently conjured tales of Saudi sheikhs and Emirates oil barons taking the Langford mega-project off the hands of majority owner Len Barrie, it was Victoria-based shopping-mall magnate Harvey Simons who appears to have almost sealed the deal in 2008.

Documents posted to Simons’ usually password-protected Seville Properties website—which included Bear Mountain’s 2005 and 2006 audited financial statements, as well as sales and loan records up to March 2008—were part of Simons’ push to enlist other investors to ante up for the resort.

How close Simons came to sealing the deal is reflected in a document titled, “West Coast Real Estate Development Senior Lending Opportunity” and dated March 2008, which reads, in part, “Seville Properties, a Vancouver Island based real estate development firm with over forty years of experience, has agreed to purchase the Bear Mountain Real Estate Development project from its current owners.”

The documents show that as Simons wooed potential lenders, the pricetag of the resort rose to reflect the South Island’s rising markets and continued build-out on Spaet Mountain. In a 2006 “special bulletin” to potential investors, the sale price for the resort was noted at $300 million, with Simons prepared to make an equity contribution of $25 million. By 2007, the anticipated purchase price had increased to $400 million and Simons was prepared to pony up $30 million for the cause.

If his preferred exit strategy came to fruition, Simons believed his backers would be paid back within 18 months through the pre-sale of nine high-rise condominium towers.The documents also show Simons had high hopes that a casino and convention centre would be built.

Asked whether Simons still has an agreement to purchase Bear Mountain, the resort’s vice-president of corporate and legal affairs, Phil LeSeur, says the deal never came through.

“The right word is ‘had,’” LeSeur told Monday. “Mr. Simons gave it a shot, but nothing came with it.”

Asked whether the development remains on the market, LeSeur replied, “There’s always people interested, but as Len Barrie says, until someone shows up with a cheque, we’re not sold.”

A call to Harvey Simons’ representative, Kevin Sherwood at Sherwood and Associates, to learn more about the aborted deal, and why the documents were made public—albeit temporarily—yielded the following statement: “There’s nothing I can help you out with that. There’s a confidentiality agreement. Sorry.”

While the deal might have fallen through, the accompanying documents make interesting reading nonetheless.

Bear Mountain’s 2006 audited financial statements, part of the package posted to the Seville website, show that after LGB9—Barrie’s namesake corporation—the largest unit holders in the development at that time were the Barrie Family Trust, followed by the Vernon Family Trust and the Gronnestad Family Trust. Kory Gronnestad is Len Barrie’s brother-in-law and owner of Scansa Construction, which has built much of the mountain infrastructure.

A document titled “Bear Mountain Master Partnership Mortgage Details,” dated July 31, 2007, shows at that time that the Bear Mountain Master Partnership had outstanding loans to the tune of $213,589,728. The single biggest creditor with an outstanding balance was HSBC, expecting repayments totalling approximately $140,000,000.

The partners’ deficit at the time was recorded at $30 million. M