CALGARY, AB / ACCESSWIRE / January 19, 2021 / Caravan Trailer Lodges of Alberta Ltd. (the "Corporation" or "Caravan") is pleased to provide updates on various corporate developments, including the re-constitution of its board, the sale of one of its properties, the appointment of a property management firm for its mobile home park and the status of certain outstanding regulatory and litigation matters.
Board of Directors
Caravan announces that the board of directors of the Corporation now consists of Herbert Styles, Mark Cowper-Smith and David Dart. Mr. Styles has also been appointed President of the Corporation. The board of directors was appointed in accordance with three Consent Orders, further described below.
Mr. Herbert Styles has had a lengthy business career, with 55 years of hands-on experience in the acquisition and marketing of real estate, both in Canada and the United States. This has consisted of a variety of transactions and activities, including commercial and residential real estate sales, acquisition and marketing of properties for syndicated investors and for his personal portfolio, property management for investor clients and for his personal portfolio, residential and commercial property rehab and renovation, land development (subdivision and servicing), converting multi-family residential properties to individual titled condominiums and being a licensed realtor with the Calgary Real Estate Board for the past 50 years (he is currently licensed with Remax Complete Realty). Mr. Styles was initially trained in the floorcovering industry, working extensively on residential and commercial construction. He has also served on the boards of two private schools, one private university and several other Christian organizations and charities and has served on three condominium boards.
Mark Cowper-Smith has served as a member of the board of directors of Caravan since 1992. He previously practiced law in the City of Calgary from 1976 to 1989. Mr. Cowper-Smith was the Senior Pastor of Grace Christian Fellowship for 12 years before moving to San Diego, CA. Mr. Cowper-Smith and his wife Shelley have traveled and ministered at churches in England, Ireland, Germany, Italy, Russia, New Zealand, Fiji, Mexico, Canada and the U.S.A He has served as Associate Pastor at Gathering Place Church in San Diego since 2002 and has authored two books.
Dave Dart is one of the founding partners of Dart Bryant LLP, a public accounting practice providing audit and review assurance services, and accounting and income tax advice, planning and services for owner-managed businesses and the not-for-profit sector for the past 40 years. He has also been the treasurer on boards of several charitable organizations.
Caravan has historically held two parcels of land located at 2787 - 86th Avenue S.E., Calgary, Alberta as its sole assets - (i) a 10.25 acre parcel of land upon which is situated a mobile home park; and (ii) an adjacent vacant parcel of land (3.5 acres) that was recently sold to the City of Calgary for a purchase price of approximately $3.2 million. After accounting for transaction costs and ongoing professional fees, $2.7 million of the proceeds of that sale have been placed in trust, with the balance being applied towards operations and professional fees. As the Corporation is not currently able to obtain D&O insurance due to the ongoing litigation described below, such funds will need to remain in trust in the short-term pending resolution of such litigation (as discussed further below).
With respect to Caravan's primary parcel of land (where its mobile home park is situated), Caravan's management has two primary objectives: 1. to manage the mobile home park with the goal of providing predictable monthly cash flow, and 2. to have the 10.25 acres re-zoned to allow for higher density, in anticipation of selling to a developer. Caravan is pleased to announce that it has engaged Emerald Management & Realty Ltd. to serve as property manager for the park. Emerald is a well-known, reputable, local management company and Caravan is pleased to have them on board. Since bringing Emerald on board the operations of the mobile home park have shown a substantial financial improvement, with positive net cash flow being produced. In addition, Caravan has made over $10,000 in further park improvements.
As the property is adjacent to lands projected by the City of Calgary to be used for the City's Green Line LRT, Caravan has also commenced a rezoning application with the City of Calgary, which is proceeding on schedule. If successful, it is expected to result in a rezoning that would allow for a future development of the property at a much higher density than is presently permitted. It is management's intention to examine such development opportunities with a view towards further maximizing shareholder value by marketing the property to a developer.
Regulatory / Corporate Matters
Caravan is a reporting issuer in the Province of Alberta and is therefore subject to Alberta securities laws. Under such laws, a Cease Trade Order ("CTO") was imposed by the Alberta Securities Commission in 2001 as a result of the Corporation's failure to file required financial statements. The CTO restricts "trades" in Caravan's shares for so long as the CTO remains in effect. Caravan has made pre-filing submissions to and been in discussions with the ASC regarding the requirements that it will need to remedy in order to have the CTO revoked. In particular, Caravan will need to file audited annual financial statements (IFRS compliant), in addition to unaudited quarterly financial statements. Caravan will also need to hold a meeting of its shareholders (at which such financials will be presented to the shareholders). Pre-filing submissions have been made to the ASC in order to determine the number of years of IFRS audited statements that will be required by the ASC in order to apply for the revocation of the CTO. Once determined, Caravan will proceed with the formal engagement of its auditors to complete such audited statements. Once those audited statements are completed, Caravan will then be in a position to call an annual meeting of its shareholders. A meeting cannot be called prior to that, as one of the principal matters of business at such a meeting will be the presentation of the financial statements to the shareholders. Caravan intends to hold this meeting as soon as the foregoing steps are completed, though exact timing will be contingent upon the review and requirements of the ASC. Further updates on the timing of the financials and proposed AGM will be provided in due course as they become available.
Management is aware that many of its previously registered shareholders have passed on their shares to friends or family by way of gift or bequest. Shares that have been conveyed in such a manner (i.e.: where no consideration was paid by the recipient to the former holder) may be re-registered in the name of the recipients/beneficiaries, as such transfers do not constitute "trades" that would contravene the CTO. Shareholders wishing to arrange for re-registrations of shares transferred in such circumstances are invited to contact our corporate solicitors, Tingle Merrett LLP, at (403)571-8000 (Attention: Tara Van Camp) for instructions on how to document such transfers. It should be noted that any other conveyance of ownership or rights attaching to your shares is likely to be seen as a "trade" and would be in contravention of the CTO. Purported transfers of such a nature therefore cannot be processed until such time as the CTO is revoked.
In 1999, the classes of shares of Caravan were amended by changing the Class A shares into Class A redeemable shares and the Class B shares into Class B redeemable shares. Under the Original Consent Order, the parties to the litigation agreed and the Court instructed that the share capital be returned to its pre-amendment terms (i.e.: to remove the redemption features and revert back to more standard share terms). Articles of Amendment to give effect to this amendment have been filed with the Corporate Registry of Alberta.
The Corporation is presently the subject of ongoing matters of litigation. The principal matter consists of an action that was commenced by Mr. Styles and two other minority shareholders against the Corporation and its previous management and directors. Pursuant to this action, various issues and allegations have been raised, including but not limited to: calling various historical transactions into question; alleging that the board engaged in conduct that failed to satisfy their fiduciary duties to all shareholders and was oppressive to the minority shareholders; and alleging that the Corporation failed to adhere to and satisfy its obligations as a reporting issuer, among other specific allegations. The action also seeks leave from the Court of Queen's Bench of Alberta to pursue a derivative action. A series of three Consent Orders has been issued by the Court of Queen's Bench of Alberta in connection with certain agreed upon matters, including the re-constitution of the board of directors, the appointment of independent legal counsel, the appointment of financial consultants to review past non-arm's length transactions and the appointment of auditors to prepare audited financial statements of the Corporation, among other things. Though the original Consent Order prescribed timeframes for the completion of various matters, in a number of those instances such timeframes did not account for required regulatory or corporate processes, or alternatively would not be financially efficient to complete in the manner contemplated. The Board of Caravan continues to progress towards completion of all matters set forth under the Consent Orders. As this matter is an ongoing litigation matter, the Corporation will provide updates as may be required under applicable securities laws, but will otherwise not be commenting on the specifics of the litigation. It should be noted that none of the allegations set forth in this claim have been finally proven in a court of law. The Corporation cautions shareholders that, other than the duly appointed directors of the Corporation and their Court-appointed legal counsel, Tingle Merrett LLP, no other representatives of the Corporation, nor the individual litigants have been authorized to contact shareholders in connection with this matter.
One of the tasks contemplated under the Consent Order is the completion of a report by independent financial advisors summarizing all transactions with non-arm's length parties from 1991 to present. That report has now been delivered to the Board by Meng LLP.
In addition to the principal litigation matter described above, the Corporation is aware of other legal matters that are ongoing. Additional processes have been instigated by Mr. Styles' former counsel, Mr. Greg Leia of the firm Wolff Leia. Management is aware that Mr. Leia has approached many shareholders and has purported to procure certain voting rights from a number of them in exchange for a promise to have some of his fees paid out of any dividends that are declared. Management is of the opinion that shareholders are not liable for fees accrued by Mr. Leia or his firm. With regard to the fees Mr. Leia claimed from Mr. Styles for services rendered as part of the above-described ongoing litigation prior to termination of his retainer, the invoices of Mr. Leia's firm were reviewed in a formal Assessment process initiated by Mr. Leia. The Assessment Officer of the Court of Queen's Bench of Alberta, in declaring that only the "reasonable" fees of Mr. Leia are payable, determined that his invoiced fees should be reduced by more than $30,000. Mr. Leia has been paid the fees owing to him as awarded by the Court's Assessment Officer. Mr. Leia has appealed the Assessment Officer's reduction of his fees. In addition to the foregoing, management is also aware of an additional process commenced by Mr. Ken Pederson (who has claimed that he is the beneficiary of a minority shareholder), requesting that the Corporation be placed into receivership. Management emphasizes that such an action is not necessary as management remains committed to the proper operation of the Corporation (as described in this release) and continues to work towards maximization of shareholder value, with the goal of distributing funds via dividend once the matters described in this release are fully attended to. Management believes that the receivership application and the processes instigated by Mr. Leia are detrimental to shareholders, in that they are resulting in significant management and legal costs to Caravan, which costs reduce the pool of funds that will be available for a final distribution to all shareholders upon conclusion of the matters described in this release.
Forward Looking Statements
Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.
FOR FURTHER INFORMATION, PLEASE CONTACT:
President and Director
Legal Inquiries can also be directed to Caravan's independent counsel, Tingle Merrett LLP, attention: Brett Code Q.C. (ph: (403)571-8014) (re litigation matters); or Paul Bolger (ph: (403)571-8006) (re corporate matters).
SOURCE: Caravan Trailer Lodges of Alberta Ltd.
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