Humber Valley Resort sold

The troubled Humber Valley Resort, which last year went into bankruptcy last year, has a new buyer according to the trustees Ernst and Young.

No details have been released but the deal may close as early as December 18.

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When hum meets chum

First there was "Adios Indy."

Here's how Ryan Cleary described it:

Brian Dobbin, the publisher and financial backer, says his interest is not in Newfoundland anymore. Which is a shame to hear from the Newfoundlander who put so much of the hum in the Humber Valley. He’s disillusioned with this place, to put it mildly, but I’ll leave it to Dobbin to tell his own story. I don’t know the details.

Poor Brian is disillusioned.  Terrible news. Dobbin apparently lost money on the Indy venture over its entire lifespan which, Cleary suggests, was undertaken solely out of Dobbin's interest in journalism and getting to the bottom of stories.

Like the Terra Nova one Cleary mentions. 

What Cleary failed to mention was that the single source they used to support the piece recanted as soon as the thing hit the shelves. The Hibernia one Dobbin was supposedly interested in is also a pack of nonsense.  Cleary never printed anything on it because it doesn't exist.  They couldn't find anything,

Regular Bond Papers readers will recognise Cleary's version of things as a spin job.  You know spin:  it's the word public relations people use instead of the less polite term "bullshit".

Ryan - intrepid fact and truth uncoverer that he claims to be - wasn't happy with just mere "spin" so he torqued things  a bit more for a two-parter in The Current:

From my perspective, I say that Dobbin put a high price on the paper to ensure that any new owner was serious about the newspaper business.

Ryan's writing gives new meaning to "60 cycle hum".

Well, turns out that Cleary missed a hum alright, a hum-dinger of a story.

A handful of months after Disillusioned Dobbin killed the Indy, we discover that Humber Valley is in the hole to the tune of $50 million.

What's worse:

Apparently there was an operational debt of one million dollars per month to run the resort and one and a half million dollars per month to offer the direct flights from Gatwick to Deer Lake.

The monthly losses at the resort were being financed by the parent company and this was threatening the financial well being of the entire company.

Hmmm.

Sounds just like the Indy, which Cleary says cost Dobbin $2.0 million in losses even though - as they always claimed - it was on the verge of breaking even.

Another story, entirely, right there and Ryan missed it.  

Amazing.

Did he ever bother to ask what his free flight cost the company?

If only he'd thought to ask, maybe he'd have had a much bigger story than the one he wrote at the time.

In the meantime, the Humber Valley resort was a great concept.  let's hope it can be salvaged.

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Humber Valley Resort reporting online

Gary Kelly's eponymous blog has been doing yeoman service covering the goings-on at Humber Valley Resort as the resort goes through its current financial travails.

This story hasn't been picked up in the local media but odds are it will gain greater attention in the days ahead.

One of the items Gary posted is an e-mail from Newfound NV that discusses the company's efforts to turn the resort around.  It begins forthrightly enough and then lays out the rationale behind the current creditor protection arrangement:

As I am sure that you are aware, Humber Valley Resort has had a very difficult time since its inception. The company has never made a profit and has failed to deliver on many of the promises made to some of the related parties over the years. We (the new management team at Newfound) were unaware of the full extent of some of these issues until we began a thorough investigation into the operation and fiscal condition of the Resort. I have huge sympathy with you during this period of uncertainty, which follows years of inappropriate management within an unsustainable business model - you must be worried about the future of your investment in Humber Valley. [Emphasis added]

If you want to keep track of the saga of a great idea gone awry, Gary Kelly is on top of the story.

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Humber Valley Resort gets 30 day creditor protection

The owners of Humber Valley Resort sought and obtained court protection for at least 30 days in order to develop a financial reorganization plan to creditors.

Only three weeks ago, the resort owners announced a major restructuring.

The resort owners are reportedly in discussions with government, as they have been apparently since last year, seeking some form of government financial support.

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Government considering subsidies to private sector businesses

The provincial government is considering subsidizing air travel for people owning property in western Newfoundland but living outside Canada.

The idea of discount air travel using public money has been around for some time but has picked up momentum as Humber Valley Resort restructures and withdraws from tourism activity.  Currently, the resort offers its property owners a subsidized direct flight between the United Kingdom and Deer Lake. The resort won't be continuing the subsidized air travel for its property owners.

International commercial air travel is currently available to the island's west coast through connections in Toronto, St. John's, Halifax and Montreal.

A summer service by Air Canada between London (Gatwick) and St. John's was canceled after Astraeus Airlines - which then operated the private charter flights to the resort - introduced a stop in St. John's to challenge what was already a weak intercontinental market out of St. John's. Astraeus canceled its St. John's to Gatwick flight as well citing low business volume.

A west coast lobby group - Humber Direct-Air  - is looking at ways of providing the subsidy currently covered by Humber Valley Resort using other funds, apparently including a source that isn't the public till.

The lobby group includes west coast businesses, as well as the Deer lake airport authority head and a representative of Humber Valley Resort.

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The changes at Humber Valley

1.  Layoff of 40 staff, as Newfound NV looks to stick to its core business lines.

2.  A brief profile of the new boss at Newfound NV.

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Newfound NV unable to secure US$21 million loan

Newfound NV announced on November 8 that it has been unable to secure US$21 million in working capital for the company's Newfoundland operation at Humber Valley.

Newfound will now attempt to raise five million pounds sterling through a new issue of shares to existing directors "at a significant discount to market price".

Newfound reported in late September that it was "in the process of finalising" the financing for it's Humber Valley Resort. The company also reported a pretax US$7.4 million loss in the first half of 2007 compared to a US$1.8 million profit the previous year. Newfound's current trading information may be found at several spots including google financial reports.

None of these news releases is contained in the publicly accessible "press room" portion of the company website. They may be located in the "investor relations" section, however, a prominent legal warning requires a viewer to confirm that they do not reside in one of several jurisdictions - including Canada - before proceeding to other pages. Oddly, the warning page is posted through flash animation and cannot be copied. Likewise, the navigation links blocked the page path and thereby preventing posting a link to even the page containing the warning.

According to Thomson Financial, Newfound's September 26 statement indicated the company was also seeking financing of US$30 million for its St. Kitts and Nevis development. In May 2006, Newfound purchased land in St. Kitts and Nevis for the development of a resort to include a 150-room hotel, 400 "upscale" villas and an 18-hole golf course. Reported cost was US$21 million.

In the photo at right, Newfound corporate vice president and attorney Derrick White is shown presenting a cheque for US$10 million to Premier Vance Amory as part of the land purchase.

Two years ago, St. Kitts and Nevis prime minister Dr. Denzil Douglas told carribeannetnews.com:

“Even in Frigate Bay, which is now virtually built out, the Newfound Group out of Canada, in conjunction with National Bank, TDC and Rams, is pursuing a major hotel and condominium project; and the Frigate Bay Development Corporation is in the process of constructing a very impressive villa and commercial development project that will significantly enhance the tourism-related amenities in Potato Bay and the surrounding areas,” said Prime Minister Douglas. [Emphasis added]

The project was renegotiated earlier this year:

According to Parry, the initial agreement between the Developers and the former CCM Administration was renegotiated to reflect a reduction of 10 years tax holiday from the initial 30 year period under the old contract to 20 in line with the regular arrangements of that nature here.

The new agreement also reflected the recovery of over 172 acres of land in addition to the historical sights (which had not been mentioned in the previous proposal), for the people of Nevis in exchange for a reduction of the purchase price from $21 million to $19 million.

“What this means is that as the value of these lands increase and improves in value and there are capital gains, we (Nevis) would benefit to the point where we will end up having millions of dollars for the continuing development of Nevis.

“I wish to make this point as well, we (Nevisians) were told that the cost of the lands was $10 million but when you are building, the cost of the loan to cover the 10 million you are really paying $18 million and we would have only benefited to the tune of $3million. So now we are talking about millions of dollars because of this deal that the Nevis Island Government will have for future development of the island,” he said.

The project is now reported to commence construction in 2008, but had been originally touted as beginning in January 2006 with estimated completion in March 2007.

[h/t to Gary Kelly and crazyaboutnewfoundland.com]

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