RE: Answers in ReplyThank you for responding to my questions. I stand corrected and apologize for the mistakes of incorrectly substituting "general" with "partner".
As a publicly traded compnay, I would expect SEDI to show the current status of insiders. I can see on SEDI that Erdman did in fact resign from HLD on Dec. 5, 2005. However, SEDI shows Irvine as still being an active insider of HLD as of today, and we know that Irvine is part of Acquireco. Is it proper for an individual to be an active insider of the target company (HLD), when that same person is offering the buy-out (Acquireco)?
Individual information Family name Levine
Given names (in full) Michael Robert
Municipality (city, town, etc.) Toronto
Province, territory or state Ontario
Country Canada
Issuer information
Issuer number 00021439
Issuer name HLD Land Development Limited Partnership
Insider's relationship to issuer Director of Issuer
Date the insider became an insider of this issuer 2005-01-01
Opening balance date
Date the insider ceased being an insider of this issuer
You wrote:
HLDalongtime then incorrectly claims that I'm getting a third of Aquireco for free. He’s omitting to disclose that part of the Information Circular where I must forego all claims to future profit sharing. He promotes the unimaginable premise that 1/3rd of all the assets would somehow magically become profit, which he calculates as $4 million in his closing paragraph!
I only wish he was right! But anyone who understands business knows that before equity in Acquireco would be worth anything
1. First the $7M paid in Cash for Units plus an estimated $2M in interest would have to be paid back.With this sentence you are confirming that Acquireco is borrowing the $7 million they will use for the buy-out.
2. Then another $7M plus $3.43M in interest (at 7% for 7 years) would have to be paid back on the Debentures.
Therefore $19.43 million would need to be subtracted from Acquireco's $14M asset value. (That is before operating costs and before subtracting a return that would be paid to the other Acquireco directors for their pledged minimum 'preferred share' investment of another $4M.)
HLDalongtime based his numbers on a $14M valuation of the HLD assets. After subtracting $19.43 million I would have one-third of a $5.43M debt, or equity worth minus $1.81 million!
If Acquireco has to borrow the $7 million needed to pay the cash portion of the Offer, then their additional interest charges of $2 million is their concern, not ours.
Mr. Thornton, only a fool would do a deal if they thought they would end up with a loss of $1.14 million. You sir, are not a fool. You know a lot more about HLD's past, present and future values than any of us ever will. You obviously feel confident enough about HLD's future risk/reward scenario that you would agree to take one-third of Acquireco's common shares. Wouldn't one third of Acquireco's common shares give you one-third of Acquireco's future profits?
You wrote:
"To cast negative aspersions Longtime then suggests that an officer or director of the General Partner may face charges for some inappropriate pledge of security under the Partnership Act.
Not only will I vouch for the integrity of all concerned, we have some of the finest legal council in the securities and real estate industry. I am confident everything has been done honourably and properly.
However, as we can see from previous posts on this bullboard, some people have been asking others to join them in filing accusations with various authorities. Because HLD has been unable to obtain Directors' and Officers' Insurance, prior to obtaining a public listing HLD had to indemnify each and every board member that acts honestly and in good faith. If there are any legal costs associated with defending against frivolous accusations, the HLD Partnership must pay for them all, which leaves Partners with even less equity still.
As an investor of a publically traded stock/unit, I have a right to complain to the BCSC, and they have a right to investigate. I don't think the BCSC does any "frivolous" work. When I met you at one of your re-organization meetings a few years ago, I agreed with the decision to go public, and voted Yes. I welcomed the opportunity for my investment to fall under the regulatory compliance umbrella offered by a publicly traded stock. From what I see in the BC Partnership Act, it is improper to pledge credit to a non-firm company, without the special authorization of the limited partners. I can't say if the pledging of HLD's assets to Acquireco has already occurred. The pledging of HLD's credit is cleary contemplated in the Offer To Purchase. The key question is whether or not the credit has been already pledged in advance of the special authorization tied in to a Yes vote. If there are new encumbrances on HLD's assets benefiting Acquireco before the special authorization was/wasn't voted for in majority, then BCSC may have some valid concerns. I can see a recent conventional land financing $7 million real estate deal posted on LFC's (Erdman/Lanyard) website, and I have to wonder if that is on HLD's assets.
You wrote:
Next Longtime rants about financing Acquireco may be able to obtain in order to pay Partners cash. Isn't it good if they have the financial strength to borrow more money than HLD can?! The objective is to help Partners that want cash to get it.
HLD's assets have millions of dollars value in net equity. I am not impressed by Acquireco's having to borrow up to $7 million, using HLD's assets, in order to pay the $7 million cash in the Offer To Purchase. I am not impressed that there is a maximum cash distribution amount of $7 million in the Offer To Purchase. If Acquireco has the financial strength you rant about, why do they need to borrow the money needed to buy us out? If Acquireco has great credit, why do they need to consider borrowing on HLD's assets? Why didn't Acquireco offer all cash to sellers, without the $7 million cap?
Why do they have a maximum cash distribution amount, which could give "Yes Voters" some cash and an IOU? If the Yes vote is 85%, and about 9.75 million units are submitted, expecting about $9.94 million cash, you only have the borrowed $7 million to share. Who will explain to "Yes Voters" that they can only receive 70%, from $7 million/$9.94 million, in cash and 30% in an IOU from Acquireco? If there is a 85% Yes vote, and someone is expecting $51,000 from their 50,000 units, who will explain why they are only getting $35,700 cash and an IOU for $15,300? I wouldn't want to field those calls.
You wrote:
Then Longtime confirms that he is indeed an opponent - of me or the HLD Partnership I am not certain. I do know that we had at least 2 HLD Partners that opposed Silver Spray so much that they immediately passed along all our strategy and newsletters to opponents seeking to bankrupt us at the time. Given that anyone can post on this bullboard there is no certainty that Longtime is even a legitimate HLD Partner (however we may soon find out exactly who he is from his IP address if his posts are deemed in breach of violations, as that may prove important if the HLD Partnership seeks to recover costs that we suffer due to his actions).
An interesting threat.......in a nutshell you suggest that anyone who complains against HLD could become a defendant in a lawsuit. Have you considered what would be required? You would first have to prove, with certainty, that BCSC asked HLD a few questions SOLEY because of investor(s) complaint(s), and not at all because of normal BCSC due diligence required to approve a multi-million non-arm's length transaction. In order to win your case, you would have to have put BCSC compliance officers on the stand, and they would have to admit that they never would have caught the possible breaches without receiving complaints from the public. You could be asking compliance officers to admit they are not as competant as a frivolous investor.
Why did I complain in the first place? It is because the Offer To Purchase states that new encumbrances may be used to finance the borrowing of the $7 million Acquireco needs to buy HLD. If you plan to sue people for complaining to the BCSC about the possible inappropriate pledge of credit, then people may counter-sue for not being specific enough in your information circular, in that it was not clear that the pledging of credit would not occur unless and until a majority vote authorized it. Witholding of Material Information? Fiduciary Duty? All kinds of intersting avenues.
Once again I will state that I would not be complaining if "NO VOTERS" were able to maintain the status quo. I want to "Profit With The Land Developers". I do not want to "Finance Acquireco/Insiders" with an IOU (unsecured debenture).
Where is the 2005 Annual Report that was promised to us by last Thursday?