MT Comes Up Empty AgainThere is a news release, stating that Landus will wait up to another month before closing.
How long are all of you prepared to wait for a closing? The YES vote was in March, and we have been pushed back to a possible September closing. That is 6 months. I'll bet that you could conceive, create and cuddle a newborn quicker than Landus can perform its due diligence on this deal.
In case any investors are wondering why Landus is taking so long to close, here is my opinion. When you look at the Offer To Purchase, you will see that one of Landus's conditions is that many of The Falls lots become converted to Fee Simple status. These lots have many liens and encumbrances on them, due to Blackburn's financial difficulties. MT is probably spending much of his time these days trying to convince interested parties to remove these liens. Landus does not want what we have now. Landus wants The Falls and HLD significantly improved before they will close. Fee simple lots will have no liens, and can be immediately sold into the robust Fraser Valley real estate market.
One thing I do not like is that HLD investors were told that $1.02 was fair value for a unit, in part because of the many liens and encumbrances on The Falls lots. Yet before Landus will close and pay us the $1.02, their conditions stipulate that the liens and encumbrances must be removed, a development which would significantly increase the marketability, value and financial health of HLD's assets. A similar situation would be having someone agree to buy your run-down house for only $102,000, due to its sad state of disrepair, yet a condition in their purchase offer states that significant renovations must occur before closing.
Michael Levine worked for HLD for several years. Levine and Thornton have known each other for many years. I cannot believe that MT did not participate in the drafting of The Offer To Purchase, especially since MT will own a third of Landus. I find it offensive that the "The Falls Fee Simple Conversion" is a condition of The Offer. Successful completion of that condition makes HLD worth significantly more than $1.02 per unit.
I am also concerned that such a challenging condition is in The Offer. MT has already had 4 full months to work on satisfying that condition, yet has failed, and now takes another month from us to try and make the almost impossible occur. How long are you prepared to wait until MT admits he cannot meet that condition? Christmas 2006? How about until the 2010 Winter Olympics? How about until Fraser Valley real estate gains another 50% in value, prompting Landus to finally close? Shame on you YES voters for approving a deal with no definite closing date. If MT cannot meet this condition, Landus will not close, and we get stuck with over $400,000 in Offer legal costs.
The latest news release also tells us how much cash we might get. There are over 9 million units surrendered for cash consideration as of July 31. If the deal ever closes, there will be $7 million cash offered. That means you would receive $0.78 cash per unit ($7 million/9 million units), and a Landus IOU for the $0.24 per unit balance. If you originally invested $100,000 12 years ago, The Offer is for about $50,000, and you would receive about 7/9ths in cash, or $39,000. The Landus IOU is unsecured, which is another mistake for us. It should have been secured by HLD's land.
I don't expect units to un-surrender. The longer it takes to close, the more units may be surrendered for cash cancellation, reducing the cash portion we all receive.
MT and Landus have an excellent opportunity on the table to get our valuable BC land for pennies on the dollar. They should be very careful not to assume that they can do better with HLD investors, than with what is apparent now. If they attempt to close with a significant change to what we all expect, with something that pays us less, due to their interpretation of a sentence or two of the Offer, then we need to consider a response. If we are surprised with a development that pays us less per unit than what we expected, and there is a quick close to the deal, we should consider legal action against Landus, ask a judge for their interpretation, and seek recourse. I can see an item of concern, but I also see its defence. I won't post it publically though.
I didn't like The Offer, and voted no. I submitted my units for cash consideration because I didn't want an IOU from Landus. The vote was Yes, but it is not closing, we are not getting our money, and our assets are increasing in value over time with no benefit to us. Fraser Valley real estate has gained in value over the past 6 months, but we are still looking at $1.02 per unit. Landus wants key issues improved before they will close. I suggest that all posters contact MT to voice their displeasure at the length of the due diligence, among other issues.
August 2, 2006 - 7:50 PM EDT
HLD Land Development Limited Partnership
TSX-V: HLD.UN
VANCOUVER, Aug. 2 /CNW/ - The board of directors of DiGiT Development
Inc. ("DiGiT"), the general partner of HLD Land Development Limited
Partnership ("HLD"), advised today that the asset purchase transaction (the "Transaction") pursuant to which HLD, DiGiT and HLD Equishare Inc. ("HLD Equishare") have agreed to sell to Landus Development Group Inc., formerly known as 0748811 B.C. Ltd., ("Landus", collectively with HLD, DiGiT and HLD Equishare, the "Parties"), subject to certain conditions, all of the real
property assets and real property interests held by HLD, DiGiT and HLD Equishare (the "Assets"), is anticipated to close within the next 30 days.
The Parties are currently attempting to resolve the remaining issues
which have arisen out of their due diligence enquiries and are preparing for an anticipated closing of the Transaction. The closing of the Transaction remains subject, among other things, to the completion of satisfactory due diligence and the satisfactory resolution of the remaining outstanding issues which have arisen out of the due diligence enquiries, the resolution of which is not certain.
Under the terms of the Transaction, the limited partners of HLD had the opportunity to elect to either:
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(a) surrender their limited partnership units of HLD for
cancellation for cash consideration of up to $1.02 per limited partnership unit (subject to the overall maximum cash
consideration limit of $7,015,706 unless Landus elects to
increase the proportion of the purchase price of the Assets to
be paid in cash); or
(b) retain their limited partnership units of HLD and continue to participate in the ongoing business of HLD; or
(c) any combination of the foregoing as they may so choose.
As of July 31, 2006, in excess of 9,000,000 limited partnership units of HLD had been surrendered for cancellation. Consequently, Landus will pay, subject to closing, a purchase price for the Assets consisting of the following four components:
(a) an upfront cash payment of approximately $7.0 million to be
distributed on a pro-rata basis to the limited partners of HLD
that have surrendered their limited partnership units for
cancellation;
(b) an unsecured participating debenture issued by Landus to HLD that pays 7% per annum for a maximum seven-year term, in the principal amount of approximately $7.0 million;
(c) the payment by Landus of HLD's working capital deficit as at December 31, 2005 to a maximum of $1.0 million; and
(d) the assumption by Landus of all outstanding debt and
liabilities of HLD to a maximum of $2.2 million.
>>
The Transaction was approved by the limited partners of HLD at an
extraordinary general meeting held on March 30, 2006. The Transaction remains subject to conditions set forth in the Transaction agreement dated February 15, 2006.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Source: Canada NewsWire (August 2, 2006 - 7:50 PM EDT)
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