“We’re kind of tired of doing business the usual way. So people are really reacting to this icon of ‘doing business differently’ under threat, ”Harding said in an interview in Vancouver Thursday.
A deadline extension will be sought from the British Columbia Supreme Court on Thursday to postpone a hearing on the acquisition agreement until Monday.
Harding hopes that Save MEC can, within a tight deadline, find enough support from credit unions, banks and investors who wish to preserve the MEC model.
He said he’s trying to reach out to MEC’s 5.4 million members and ask for their help in derailing the acquisition, and hopes to find a credible alternative before Monday morning.
MEC was founded in 1971 by a group of mountaineers seeking to source and distribute quality gear in Vancouver. Members joined at minimal cost and owned a portion of the business, and helped steer the business.
The current board of directors has already unanimously approved an agreement for a private investor to acquire the assets of MEC. Kingswood Capital Management of Los Angeles is preparing to buy out the co-op under the Companies’ Creditors Arrangement Act (CCAA).
This legislation allows companies in financial difficulty to restructure.
Financial details of the transaction were not disclosed.
MEC enjoys judicial protection under the CCAA, which allows the co-op to continue operating while the plan is developed under judicial oversight Alvarez & Marsal Canada Inc.
“We reject your redemption”
On September 21, Harding published an open letter to Kingswood.
“An American private equity firm with five employees cannot buy a Canadian cooperative with five million members whose owners refuse to sell,” he wrote.
“Kingswood has recognized that as member-owners we are in control of what happens next. We never agreed to sell our cooperative. Our answer is simple: we reject your buyout. ”
Last year, the retailer detailed the financial woes caused by slow sales, low inventory, supply chain issues and heightened competition online after losing $ 11.487 million in 2019. on sales of $ 462 million, according to financial statements audited by KPMG and published on MEC’s website.
On September 14, the board gave an explanation of the sale on MEC’s website.
“Despite significant progress on a thoughtful turnaround strategy undertaken by new management, no strategy could have anticipated or overcome the impact of the global pandemic,” wrote board chairman Judi Richardson.
“… Kingswood’s commitment to honor MEC’s philosophy and the solid financial footing this transaction will provide us with gives us tremendous confidence in the future. ”
Kingswood is committed to keeping at least 17 of MEC’s 22 locations across Canada and 75% of the workforce open.