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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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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Dobbin resigns from Newfound NV

Newfound NV announced today that Brian Dobbin is leaving the company effective December 31, 2007.

He will also be resigning his Newfound directorships in order to pursue unspecified
personal interests, according to a company news release.

Dobbin's shareholdings in the company are unaffected and existing restrictions on the disposal of shares remain in effect.

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Newfound Group lobbying province apparently without lobbyist registration

Newfound Group has been lobbying the provincial government for assistance with the Humber valley resort yet no lobbyists have been registered, as required by provincial law. [Update: See correction below]

Interviewed by CBC Radio's David Cochrane, Jeremy White, president of Newfound Group said the company has been working with the province to have the province lobby Air Canada to restore a direct flight between St. John's and London.

White also said his company was seeking provincial government assistance with its marketing program. He said the provincial government had offered to help defray some of the company's annual marketing program. White indicated that the company the government had been working closely together to deal with the company's financial issues.

However, the provincial lobbyist register contains no entries for anyone or any company related to Newfound.

The provincial lobbyist registration act requires that a company lobbying the provincial government register within 10 days of starting any lobbying activities. [Correction: The 10 day rule applies if the company is using a consultant lobbyist.] The online registry is current as of 21 November. An in-house lobbyist must register if his lobbying activity constitutes 20% or more of his or her time during a three month period.

In July 2007, Humber Valley Resort hired former tourism minister Paul Shelley as its new general manager. Shelley retired from politics on July 13 and was replaced in cabinet in January, having signalled his intention not to seek re-election in the fall. Shelley was human resources minister at the time of his departure from cabinet.

In addition to any political heights Shelley has scaled, his days at Humber Valley have included the odd rock wall, as this video shows. This and other videos on the resort can be found on the resort blog.

Shelley isn't the only Humber Valley executive with ties to the current administration. Humber Valley chief executive officer Brian Dobbin serves on the provincial government's Irish business partnership board. He is also publisher of The Independent newspaper.

Neither Shelley nor Dobbin is listed in the provincial lobbyist registry.

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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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