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BEN EOIN, N.S. —

The shareholders of Ben Eoin Golf Ltd. were frantically seeking a lifeline to save The Lakes golf course from closure when Ben Eoin Development Group Inc. came forward with a proposal last year to take over all of its debts and liabilities in a no-cash deal.

The debt burden facing shareholders was immense – payments due on a $3.5 million federal loan, a mortgage of $1,052,508, capital expenses projected to cost more than $500,000 and payments in arrears of more than $300,000, according to Ben Eoin Golf Club president Coleen Moore-Hayes in an information package circulated to shareholders earlier this year.

All of the information is contained in documents filed at the Nova Scotia Supreme Court where the Cape Breton Ski Club is seeking an injunction to stop the pending sale of The Lakes to the Ben Eoin Development Group. The injunction hearing is scheduled for May 16-17.

The ski club, which owns and operates Ski Ben Eoin, believes through a 2006 memorandum of understanding with the Ben Eoin Golf Club that the ski club has the first right of refusal to take over the golf course if its ownership structure were to change. The golf club signed a 99-year lease with the Cape Breton Ski Club in 2008.

The golf club has previously said it does not have a copy of the MOU in its possession and doesn’t believe it has been signed by its executive.

The Ben Eoin Development Group led by its president Rodney Colbourne is in the midst of finishing construction on a clubhouse and restaurant at The Birches Country Inn, a short distance from the golf course on the south side of Ski Ben Eoin.

“Our team continues to work closely with the (Ben Eoin Golf Club) board of directors to ensure a smooth transition of services and operations, ensuring that the golf course opens as scheduled for the May 2019 season,” Colbourne wrote in a Feb. 26 email to Ben Eoin Golf shareholders.

“The transaction continues to move forward. We did not fully appreciate the amount of time and paperwork involved in the process but everything continues to progress smoothly.”

The update from the Ben Eoin Development Group came three weeks after golf shareholders voted nearly 97 per cent in favour of the deal to have the development group take over ownership of The Lakes.

As part of the group’s proposal, shareholders would no longer be subject to “cash calls” that would ask each member to provide a designated amount of money to ease the financial burden on the golf club. Previous cash calls ranged from $1,000 to $2,000 per shareholder.

As well, the balance owing to the group of eight shareholders who made an additional $8,000 loan to the course would be repaid.

The proposal included perks for shareholders who would only have to pay 50 per cent of the annual single adult membership fee and they would not be assessed the additional $1,000 shareholder dues that had been paid for the previous three years.

There was also the offer of a free locker in the new clubhouse for the 2019 and 2020 golf seasons.

Moore-Hayes said in an interview last week the investment by the Ben Eoin Development Group will bring the golf course and resort to a new level.

“It’s not just the improvement of the course and the amenities, it’s the assurance that the course will retain the integrity of a five-star course,” she said.

“We will have a green roller instead of losing our greens. We will have the proper grounds equipment that we would not be able to afford to continue. Those are the things we’re missing.”

The Ben Eoin Golf Club has only generated a profit in two of the past nine seasons in operation.

In a Jan. 16 email to Ann Terese Doucette, then-president of the Cape Breton Ski Club, golf club treasurer Jerry Redmond outlined the golf club’s precarious financial position.

He said he “instigated” a shareholder cash call of $2,000 each in 2016 that added up to approximately $130,000 in extra revenue. With the additional funds came a $31,000 invoice from the Atlantic Canada Opportunities Agency, which was looking to recoup its loan by taking 45.5 per cent of cash profits.

“For 2017 we did not show a cash profit but a small cash loss. Yes and that is after another shareholder cash call of $1,000 each and totalling $68,000 of revenue,” he said in the email.

A small cash profit of $31,000 was recorded in 2018.

Redmond also mentioned in the email that the money already past due to ACOA was becoming a problem.

“ACOA has already threatened us in writing,” Redmond said. “They sent us a second bill dated Nov. 30th adding an additional (approximately) $1,000 in interest to the $31,000 balance we owed them and stating that it was due immediately.”

In a meeting in May 2018, Redmond said he was told by an ACOA official that the federal agency would not “ever forgive the $3.5 million or any part of it with our Company.”

The Cape Breton Ski Club, a non-profit society, has not indicated in its court filings how it could assume the debt from the Ben Eoin Golf Club and still be financially viable over the long-term.

Part of the ski club’s argument is that the two operations are “highly intertwined” with a central portion of the golf course on land leased from the ski club and there’s also a ski run that’s part of the golf club’s land parcel.

The Ben Eoin Development Group says it intends to honour the lease agreement between Ben Eoin Golf and the Cape Breton Ski Club until it expires 88 years from now on Nov. 30, 2107.

In a letter to the ski club executive following the February vote by golf shareholders, Redmond said the Ben Eoin Development Group wants to foster a “strong working relationship” with the ski hill’s board as the golf development project continues.

But he also said the development group is prepared to seek both general and specific financial damages from the ski club if its assertion of the first right of refusal in the MOU is proved “frivolous.”

RELATED:

• Ski Ben Eoin worried about future

• Cape Breton Ski Club files injunction to halt sale of The Lakes golf course to local development group