CCWIPP Business 'Insider'
As ususal, The Canadian Commercail Workers Industry Pension Plan (CCWIPP) has pitched in to help AFM Hospitality bail out of a loser hotel.
quote:
...The first secured lender consented to the sale with the terms of indebtedness continuing unamended. The second lender required a change in the terms of its indebtedness, but none of which will cause any material impact on AFM.
The second lender is I.F. Propco Holdings (Ontario) 23 Ltd., a company controlled by the Canadian Commercial Workers Industry Pension Plan ("CCWIPP"). Management has become aware that CCWIPP, through various entities, controls more than 10% of AFM's outstanding voting securities. As such, CCWIPP and the entities its controls are insiders of AFM. The restructuring of AFM's indebtedness immediately prior to the sale of the Hamilton hotel constituted a related party transaction under applicable securities laws.
Pursuant to the agreed terms, an entity controlled by CCWIPP extended new financing in the principal amount of $2.8 million to Kelloryn Hotels (Hamilton) Inc. ("KHHI")....
So far, CCWIPP through it's Propcos has taken shares in leiu of payment; we believe CCWIPP financed a bunch of Kelloryn (Ron Kelly/RHK Capital)hotels that all had to be dumped; and now a "new entity" has chipped in nearly $3 mil to help out owners of an historical money pit.
Well, well, this adds a new chapter to Haunted Houses of Labour.
Is this how it works? CCWIPP through its Propcos finance hotels, then for some mysterious reason the UFCW tries to push out the HERE with a cut-rate hotel collective agreement?
Here's a neat excerpt from an interesting case: ONTARIO LABOUR RELATIONS BOARD
2339-93-R Michael McDougall, Applicant v. Hotel Employees, Restaurant Employees Union Local 75, Responding Party.
quote:
II The Facts
2. In the instant application the employee petition to terminate the union's bargaining rights was chiefly sponsored by Michael McDougall, who has worked at the hotels since December, 1992, as a bellman. Evidence before the Board indicates that the hotel, now operating as the Howard Johnson's Plaza Hotel North York ("the hotel"), was closed rather abruptly in July, 1991 as a result of financial difficulties. In fact, since 1981 the hotel has gone through a series of name changes and, presumably, changes in Ownership. The operation of the hotel resumed in December, 1992 under new ownership, that of Kelloryn Hotels Inc., ("Kelloryn" or "the company"), a company incorporated pursuant to the laws of Ontario. The President and Chief Executive Officer of Kelloryn is One Ronald Kelly.
3. On November 20, 2992, prior to the resumption of operations at the hotel, a collective agreement was entered into between the United Food and Commercial Workers, Local 206 ("Local 206") and Kelloryn. The collective agreement was executed, on behalf of the hotel, by Ronald Kelly [father Ron/RHK Capital] and on behalf of Local 206 by John Hurley and Frank Kelly, the President of Local 206 and a Business Representative of Local 206, respectively. Ronald Kelly and Frank Kelly are not related. The collective agreement recognized Local 206 "as the sole and exclusive bargaining agent for all employees of the company save and except supervisors, persons above the rank of supervisor, front desk, office and clerical and security staff",…
5. The evidence before the Board suggests that at the time of their hire by Kelloryn, in late November or early December, 1992, each now employee was provided with a blank Local 206 membership application and was asked to complete it and return it to the employer's representative, who was an individual hired by Accomodex [AFM Hospitality] to interview and hire employees for the hotel. In fact, Article 15.01 of the collective agreement between Local 206 and Kelloryn provided that, subject to the provisions of the Labour Relations Act, all employees covered by the agreement 'shall become members and remain members of (Local 206) in good standing as a condition of employment'. The employees who testified recalled, in varying degrees of detail being advised in early December 1992 by management that their union was Local 206. They were also advised at that time that "the United Food and Commercial Workers" ("the UFCW" had some financial interest in the hotel.
So many machine heads like to play big shot with pension money:
quote:
ULLICO directors gained handsomely from this procedure. On Dec. 17, 1999, Georgine offered to sell 4,000 shares to each of them at $54 apiece, the 1998 book value--even though ULLICO already knew its Global Crossing profits had lifted its stock value to $146. The union pension and general funds that own most of ULLICO's shares weren't given the same offer, or even told about it, officials say. Georgine himself went from holding 8,868 shares in 1998 to 52,868 in 1999, according to ULLICO's proxies.
In 2000, ULLICO directors again took advantage of the lagging
stock-valuation system to cash out. Before the Dec. 31 price adjustment that year, ULLICO offered to repurchase shares, as it had done annually since 1997. The tender, at $146, was limited to 205,000 shares out of 7.9 million outstanding. All shareholders could sell a prorated amount based on their total holding. Yet those with fewer than 10,000 shares- mostly the directors—could sell all their stock.
The result: Georgine and other directors, knowing the price would be cut to $75, were able to sell at $146, while the pension funds with much larger stakes were restricted in how much they could sell. Overall, ULLICO's directors sold 73,000 of their 120,000 shares, AFL-CIO officials say, giving them combined profits of at least $6.7 million.
And they talk about corporate big shots being pigs at the trough. Here's The link.
And I guess the lower machine heads don't get to eat at that trough, so they do their own trough that they fill with "renovation" funds:
quote:
UNION BIGS NAILED IN $10M MTA SCAM: FEDS
By AL GUART and KATI CORNELL SMITH
April 19, 2002 -- A ring of corrupt union officials, a developer and a mobbed-up contractor took taxpayers for a $10 million ride in a massive no-show job scheme, a federal indictment charged yesterday.
FBI agents roused seven suspects, including two officers from Local 14 of the International Union of Operating Engineers and two members of Local 1 of the Elevator Constructors union, and charged them with fraud and money laundering for allegedly pillaging millions from the Metropolitan Transportation Authority in 1999.
The money was looted from a $55 million renovation of the MTA's new headquarters at 2 Broadway.
The scheme centered on Morris "Mickey" Diminno, 45, a Local 14 shop steward, who allegedly set up shell companies with James Roemer, the union's treasurer, and Local 1 members Matthew Downey and David Coakley.
Also allegedly in on the scheme was developer Frederick Contini and John "Johnny Rhino" Vitiello, a reputed Gambino associate who runs a construction firm.
The sham firms purported to hire elevator operators to carry workers and equipment at the site for an inflated cost of $14.3 million, the feds charged.
Instead, the defendants paid $4 million in salaries and other costs, billed the MTA with bogus paperwork for the rest of the money and funneled the booty into their shell companies, the feds charged.
In court yesterday, Assistant Brooklyn U.S. Attorney Daniel Alonso argued Roemer should be held without bail because he told two grand jury witnesses to flee, harbored a fugitive and destroyed evidence. A bail hearing was set for next week.
These union guys are such suckers. They are like sitting ducks for biz-guys looking for a source of funding that banks and other traditional lenders won't touch. I have to ask the question: If it's too high risk for the bank, why isn't it too high risk for union members who earn little more than minimum wage in some cases?
Is this AFM just buying up the hotels that this guy Kelly wants to unload and then selling them off? What kind of a return are the members getting for the pension plan money that was loaned out to him? Is that the question?
You should check out the deal on the Hamilton HoJo.
We've checked it out. It seems like it was paid for by CCWIPP when it was bought by RHK Hotels, which later rolled in with AFM Hospitality. Most of the other hotels bought by RHK at that time were dogs in the first place and sold as dogs later.
The Hamilton property was such a dog that it wouldn't sell. It hung on as a loser until AFM made the grand announcement that they finally managed to unload it.
quote:
NEWS RELEASE
AFM Hospitality Corporation Divests Remaining Hotel Property
AFM now focused on expanding its hotel brand franchising and hotel management businesses
Toronto, ON, April 12, 2002 – AFM Hospitality Corporation today announced that it has successfully completed the sale of the Royal Connaught hotel in Hamilton, Ontario. Regulatory approval has been granted for this transaction, and all required lender approvals obtained.
As previously announced in January 2002, this sale marks the completion of AFM's strategic decision started in 1997 to divest real estate in order to focus exclusively on hotel franchising, management and related services as a relatively low risk, less capital-intensive business model. The first secured lender consented to the sale with the terms of indebtedness continuing unamended. The second lender required a change in the terms of its indebtedness, but none of which will cause any material impact on AFM.
The second lender is I.F. Propco Holdings (Ontario) 23 Ltd., a company controlled by the Canadian Commercial Workers Industry Pension Plan ("CCWIPP"). Management has become aware that CCWIPP, through various entities, controls more than 10% of AFM's outstanding voting securities. As such, CCWIPP and the entities its controls are insiders of AFM. The restructuring of AFM's indebtedness immediately prior to the sale of the Hamilton hotel constituted a related party transaction under applicable securities laws.
Pursuant to the agreed terms, an entity controlled by CCWIPP extended new financing in the principal amount of $2.8 million to Kelloryn Hotels (Hamilton) Inc. ("KHHI"), the wholly owned subsidiary of AFM that owns the Hamilton hotel asset. Such new debt has a term of 2 years and will bear 11% annual interest and will be renewable for an additional year. KHHI transferred such funds to AFM, which paid down existing debt to the second lender. Immediately following such transaction, the shares of KHHI were sold at the fair market value of $6 million as previously announced. The effect of such transaction is that such new related party indebtedness was immediately removed from AFM's consolidated balance sheet upon the sale of the Hamilton hotel. The purchaser agreed to such financing terms. This debt restructuring will have no effect on AFM's business. AFM's press release of January 17, 2002 sets out further detailed information on the sale of the Hamilton hotel asset.
Completion of Private Placement
AFM is also announced the completion of private placements with parties that are not related to the company. Approved by shareholders at AFM's special meeting of December 19, 2001, AFM issued a collective total of 15,263 units at a subscription price of $4.75 per unit. Each such unit consists of one common share one warrant exercisable for one common share within 5 years for an additional $4.75. The proceeds of such private placements are to be used for general working capital requirements. The completion of these private placements will conclude the Share Purchase Arrangement approved at the recent shareholders meeting.
About AFM Hospitality Corporation
Through its subsidiaries, AFM Hospitality Corporation, which also owns AFM Preferred Alliance Group Inc., AFM Asset Management Inc., Northwest Lodging International (USA) Inc. and Northwest Lodging International (Canada) Inc., is the exclusive Canadian Master Franchiser for ASTON® , Best Inns® , Hawthorn® Suites, Howard Johnson® , Knights Inn® , Park Plaza, Park Inn, Ramada® , Villager® Lodge and La Quinta® Inns. AFM Hospitality Corporation operates or has open and/or executed franchise and management agreements with more than 170 hotels in North America, representing an inventory of nearly 20,000 hotel rooms. The company's primary focus is to increase the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management agreements, and acquire other franchise businesses related to the hospitality industry, while making available property management services. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock Exchange (TSE:AFM). AFM Hospitality Corporation system-wide sales for branded hotels in its franchise portfolio and properties operated by the company exceed CDN$300 million per year. AFM Hospitality Corporation may be reached at " onclick="javascript:newWindow();">www.afmcorp.com[/quote]
The sale seems to be completed so as to make it an entry in CCWIPP's 2001 financial statement. However, the sale wasn't to a stranger, but to an AFM insider:
quote:
Toronto, ON, December 31, 2001 – AFM Hospitality Corporation (TSE:AFM) announced today that its wholly-owned subsidiaries, Kelloryn Holdings Inc. and Kelloryn Hotels (Hamilton) Inc., executed an agreement on December 31, 2001 with Canmac Hotels Corporation ("Canmac") for the sale of the Royal Connaught Hotel in Hamilton, Ontario....
They go on to announce:
quote:
Now that AFM has divested all of its real estate, we will continue to deploy our growth strategy which we have demonstrated this past year with expansion in Western Canada through our subsidiary Northwest Lodging International."
quote:
Canmac is a Nova Scotia unlimited liability company and an affiliate of American Motels Acquisition Company LLC ("AMAC"). AMAC is a limited liability company incorporated in the State of Washington that serves as a portfolio manager for the acquisition or lease of lodging properties throughout the United States and Canada. The primary focus of AMAC is to form and invest in limited liability companies or special purpose limited partnerships ("subsidiaries") involved in the acquisition or lease/purchase of non-performing and under performing lodging properties.
So AFM says it unloaded the hotel, but we find out it is bought by a company controlled by AFM's Chairman and Cheif Executive Officer Larry Horwitz.
[quote]AMAC is presently controlled by two shareholder/directors of AFM – Lawrence P. Horwitz and André S. Tatibouet.
Was it a good deal?
quote:
Pursuant to the terms of the agreement, Canmac will purchase for CDN$ 100 all of the issued and outstanding shares of Kelloryn Hotels (Hamilton) Inc. ("KHHI") the company that is the registered owner of the Hamilton hotel. At the time of the execution of the agreement, the hotel was subject to an aggregate of approximately CDN$ 6 million of indebtedness secured by mortgages to third party lenders. This transaction results in the removal of approximately CDN$ 6 million debt from AFM's consolidated financial statements, together with the removal of an asset held for sale at a value of approximately CDN$ 5.5 million. Certain intercompany debt of KHHI to AFM will not be recovered which will result in AFM not being able to benefit from approximately CDN$ 1.1 million in capital losses from this divestiture. Management has determined that the unavailability of this capital loss will result in an approximately CDN$ 180,000 reduction in AFM's future consolidated after-tax earnings, but such amount will likely be more than offset by income earned through receipt of management fees and franchise fees from hotel operations.
The "entity controlled by CCWIPP" that loaned the $2.8 million shows up on CCWIPP's books at I.F. Propco Holdings (Ontario) 53. However, the "second lender" (I.F. Propco Holdings (Ontario) 23) mentioned above is recorded on CCWIPP's books as sinking $8.6 million into the Hamilton Hotel, but the books say the investment is only valued at $7.2 million. That seems to leave CCWIPP with $11.4 million sunk into a hotel that ain't worth all that much to anyone.
So, the guys who run AFM shuffle the Hamilton Hotel to another one of their companies and say that the hotel was sold.
CCWIPP ships $2.8 million into RHK Hotels, which is owned by AFM, and then the RHK payment is slid into AFM's account and then CCWIPP rearranges some of the other debt terms, but in the end, the hotel didn't really move far from the grip of the AFM honchos. The only real change came with CCWIPP now having well over $11 million sunk into the Hotel that just won't sell.
However, what's really scary is that the hotel was sold to a company that has access to mega cash to renovate the hotel. Hmmmm.... I wonder who will loan the money to do that?
You should check out Rod Bryden's World Heart Corporation. CCWIPP apparently had almost $12,000,000 sunk into World Heart Corporation in 2000, however, it was worth only $7,000,000. I've heard that that stock went from around $20 a share to about a buck a share today.
Rod Bryden is also CEO of Terrace Corporation, the principal owner of the Ottawa Senators Hockey Club. I understand that CCWIPP has close to $17,000,000 invested with Terrace Corporation.
If you're checking out investments, check those two out.
World Heart Attack.
This isn't good considering that the stock used to be at a high of over $20 per share.
To see some of the corporate documents of CCWIPP funded enterprises go to the SEDAR site.
You can check out stock performance on some of the companies by going to the Toronto Stock Exchange site.
How interesting. CCWIPP has a load of dough in Southern Ontario Property Management Corp.
One site, which CCWIPP dumped over $6 million into, is located at 1450 Meyerside Drive in Mississauga.
The tennents are an impressive group:
CANADIAN GROCERY PRODUCERS COUNCIL
1450 Meyerside Drive
Suite 308
Mississauga,ONTARIO
L5T2N5
UFCW Local 175 Training & Education Centre
1450 Meyerside Drive
Suite 700
Mississauga, ON
L5T 2N5
And what's with all this development land they own? Land in the GTA is worth a lot right now. What's the plan for this land?
And one more question: I notice that a lot of the mortgages are between 8% and 11% interest. Is this the going rate for these kinds of loans to these kinds of businesses or are the biz guys getting a break? If so, why should union members be giving them a break? Why aren't they borrowing money from more traditional sources of financing like banks?
11% and 12% are normal bank rates, but if a bank would lend, why would these guys be runnin' to a small pension fund like CCWIPP?
Oh and BTW, We found Land Securities Corporation. It has an office in Century Park Place in Calgary. That's the property that I.F. Propco (Alberta) 2 lent over $4 million to Land Securities Corporation to buy.
It's located in:
#301 - 855 8th Avenue SW
Calgary AB
T2P 3P1
Renovations cost almost 100% more than estimated. Is CCWIPP losing money on this investment?
Perhaps the CCWIPP Trustees could comment.
I must say that out of all the ccwipp investments this is the one that I am most perplexed about. What prompted the decision to invest in this property? Why this property and not one of thousands of other hotels? What due diligence was conducted? What is the relationship between ccwipp and RHK Capital (Father Ronnie Kelly's company)? Why do they seem to favour investing in Father Ronnie's ventures instead of other accommodation industry ventures? Who is benefitting the most from these investments? Father Ronnie or the members?
I am intent upon getting the answers to these questions. So ccwipp guys: Don't make me wait!
Has anyone tried to contact Father Ronnie? If the ccwipp trustees won't tell us what's so special about their relationship with him, maybe he'd like open up. I mean, what's he got to lose?
I believe we just missed Father Ron. He bounced back to Canada and did a bit-o-socializing on the Rock or Maritimes in general. He may be restin' up a bit in Panama at the moment.
Hey, Ron bye, drop us a line here and tell us what ye be up to at the moment.
I was going over the Dynamic Venture Opportunities Funds documents the other day, and I was surprised to see Mike Fraser as a Director along with his uncle Cliff in 1993. However, later in the decade Mike seems to drop off in favour of Eugene K. Fraser, who other documents state that he is VP of Propco 100 and possibly a director on CCWIPP's Investment Committee.
Uncle and nephew are on Board, nephew drops off and is replaced by man with identical last name. Are the Frasers related too, or is it just a huge coincidence?
What's really odd is that Mike the union boss of all UFCW bosses in Canada is the one who dropped off instead of his supposedly-retired uncle.
Hey, Mike, whazzup wit dat?
Let's talk about this. Share prices and profitability are two different issues. This is a publicly traded company with very little, if any, public trading. Is this a prudent investment? One can check all the documents at: AFM Hospitality
quote:
AFM Hospitality Corp. Closes Northwest Lodging Acquisition, Long-Term Debt Capitalization Agreements
Press Release
December 12, 2000
TORONTO, ONTARIO -- AFM Hospitality Corp. (TSE:AFM), Canada's largest multi-brand lodging franchisor, has announced the completion of two major agreements.
* Dec. 6, 2000 -- Agreement with major creditor I.F. Propco Holdings (Ontario) 23 Ltd. to revise terms of AFM's existing long-term debt, including, among other things, the conversion of a portion of the debt to equity in AFM. (Material terms attached.)
* Dec. 7, 2000 -- The acquisition of the management agreement portfolio and other selected assets of Northwest Lodging, Inc. of Seattle, WA.
I.F. Propco Holdings (Ontario) 23 Ltd., AFM's major creditor, is beneficially owned by the Canadian Commercial Workers Industry Pension Plan (CCWIPP) which currently holds 15.8 per cent of the issued and outstanding common shares of AFM
The debt conversion, disclosed on November 7, 2000, has been reviewed by the AFM board of directors and the audit committee. All directors approved the terms of the proposed transaction, other than the director related to the major creditor, who abstained. Majority shareholder approval of the terms of the debt conversion has been obtained from shareholders not related to the major creditor, including a shareholder that beneficially controls more common shares of AFM than CCWIPP and who is being treated identically to all other shareholders of AFM.
The Northwest Lodging agreement, disclosed Oct. 4, 2000, and completed in escrow Oct. 19, 2000, comprises assets supporting management of 14 hotels for a total of nearly 1,700 rooms located mainly in the U.S. Pacific Northwest. AFM will operate these hotels under the Northwest Lodging International name as a subsidiary of AFM. Principals Andre S. Tatibouet, Chairman of Northwest Lodging and Lawrence P. Horwitz, President and CEO of Northwest Lodging, join the AFM board of directors, with Mr. Horwitz becoming Chairman of the Board.
Under the terms of the agreement, AFM will acquire selected assets from Northwest Lodging for CDN $4.5 million. In consideration, Northwest Lodging, Inc. and its shareholders will receive two million common shares of AFM valued at CDN $2.25 per share, together with 444,444 convertible securities which must be converted 1:1 for AFM common shares within 13 months at CDN $2.25 per share, 327,944 warrants exercisable at CDN $2.25 per share, 500,000 warrants exercisable at CDN $2.50 per share and 500,000 warrants exercisable at CDN $3.25 per share (all warrants to expire after 5 years).
``We are pleased to announce the completion of these two agreements,'' says Stephen Phillips, AFM CEO and Vice-Chairman of the Board. ``They give us the tools to strengthen our balance sheet and extend AFM's presence into the North American lodging marketplace.''
Through its subsidiaries, AFM Hospitality Corporation, which also owns HFS Purchasing Services Canada, AFM Asset Management Inc., Northwest Lodging International (USA) Inc. and Northwest Lodging International (Canada) Inc., is the exclusive Canadian Master Franchisor for ASTON®, Best Inns®, Hawthorn® Suites, Howard Johnson®, Knights Inn®, Ramada® and Villager® Lodge. With over 120 locations committed nationally, AFM Hospitality represents an inventory of more than 12,000 hotel rooms. The company's primary focus is to increase the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management agreements, and acquire other franchise businesses related to the hospitality industry, while making available property management services. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock Exchange (TSE:AFM - news).
(Debt conversion material terms attached)
AFM DEBT CONVERSION AGREEMENT: Material Terms
* The Major Creditor will reduce the outstanding indebtedness by the amount of $2,000,000.00 in consideration of AFM issuing to the Major Creditor 888,888 non-voting preference shares in its capital stock with the following attributes:
- an 8.5% cumulative annual dividend to commence as of the 1st day of October 2005;
- a right of the holder to convert each preference share for one common share of the Borrower at any time on or after the 1st day of October 2005; and
- a right of the Borrower to redeem each preference share at a price of $2.25 at any time, subject always to the holder's right to convert as set out above.
* The Major Creditor will extend the maturity date of a further $3,000,000.00 of indebtedness until the 1st day of October 2005, interest will be increased to 14.15% per annum, there shall be no prepayment privileges and AFM shall grant the additional security of a pledge of the shares of Howard Johnson Franchise Canada Inc. (formerly Accomodex Franchise Management Inc.), a pledge of the shares of Ramada Franchise Canada Inc. and cause its wholly owned subsidiary, Northwest Lodging International (USA) Inc., to give security over all of its assets;
* The Major Creditor will extend the principal repayment of a further $2,000,000.00 currently due the 31st of December 2000 to the 31st day of July 2002, and AFM will cause its wholly owned subsidiary, Northwest Lodging International (USA) Inc., to give security over all of its assets;
* AFM will issue to the Major Creditor 888,888 warrants in its capital stock which will entitle the Major Creditor to convert each warrant for one common share of AFM at a price of $2.25 per common share at any time within 5 years from the date of issuance of the warrant.
And what's happening today
quote:
For Immediate Release
AFM HOSPITALITY CORPORATION SECURES NEW FLEXIBILITY IN FINANCING
Agreement with I.F. Propco Holdings designed to meet AFM's needs for rapid growth
Toronto, Ontario (CANADA) – December 2, 2002 – AFM Hospitality Corporation (TSX:AFM) today announced that it has reached an agreement with its major lender, I.F. Propco Holdings (Ontario) 23 Ltd., to revise certain terms of AFM's financing. The new arrangement will enable AFM to accelerate its growth plans with more flexibility to assume new debt for future acquisitions or refinancing. In addition, the lender's security will be subordinate to acquisition financings and new operating lines of credit in the future.
'At AFM we were looking to achieve the financial flexibility and stability necessary to continue our strategic growth,' said Lawrence Horwitz, Chairman and CEO of AFM Hospitality Corporation. 'Our track record of acquisitions over the last year demonstrates our strong commitment to expanding our business. This new arrangement with our lender will allow us to pursue our plans for accelerated growth.'
AFM has also agreed to redeem for cash 888,888 preference shares held by I.F. Propco Holdings over a three year period at a price of $2.25 per share. This represents a reduction equivalent to 10.6 per cent of the current float, or 5.6 per cent of the diluted float. After completion of such redemption, I.F. Propco Holdings will still hold 888,888 warrants of AFM and its related significant shareholder will hold 879,714 common shares.
AFM will enjoy further financial flexibility since I.F. Propco Holdings has agreed to reduce the existing annual interest rate in stages from the present 14.15 per cent down to 8.5 per cent. AFM will make interest-only payments monthly on the remaining debt; the principal will remain due at maturity in October, 2005. In addition, AFM will gain a conditional right to pre-pay the remaining debt without bonus or penalty. The flexibility provided by these new financial conditions will allow AFM to continue seeking growth opportunities.
Certain senior officers have agreed to limits in compensation and will also covenant not to sell more than 5 per cent of their respective holdings of AFM securities within any 12 month period. AFM will also continue benefiting from the expertise provided by certain directors who, together with the lender, are related to a significant shareholder of AFM. AFM anticipates that these new terms will only impact positively on its business and affairs. AFM expects to be able to generate sufficient funds from operations to honour its amended obligations.
I.F. Propco Holdings will receive a substantially similar financial return on the debt but gains a commitment by AFM to exercise its pre-existing redemption right regarding the preference shares held by the lender. This will provide the lender with a fixed value of $2.0 million for its 888,888 preference shares ($2.25 per share). This is below the current $5.00 value of AFM's common shares. AFM believes that all remaining shareholders will benefit from reducing the outstanding float at a cost below current market. Management and the Board of Directors of AFM have considered these terms in detail and have determined this transaction to be in the best interests of the company.
AFM is currently seeking regulatory approval for such changes and expects that definitive legal documents will be executed and the transaction completed by December 31, 2002.
Now isn't that nice. I wonder if VISA would do the same for me.
I tell 'em I can't pay, so they take paper instead. When it's time to cash in the paper, VISA tells me to not worry whether I have the cash 'cause they don't need the money right now, and to help me out, they will cut my interest rates nearly in half.
It's also nice that had CCWIPP taken the shares at their face value they would have almost doubled in price from the $2.25 price set in 2000.
Hmmm...... Maybe our financial experts could tell us how prudent the Trustees have been on this one.
Hey, wait a minute. Somebody want to explain to me how selling your shares at half the asking price is good investing.
quote:
Management and the Board of Directors of AFM have considered these terms in detail and have determined this transaction to be in the best interests of the company.
In the best interests of the company? I don't doubt that it is. What about the best interests of CCWIPP members? I wonder what AFM Director/UFCW Local 175 President Wayne Hanley would have to say about who's benefiting the most from this deal?
Oh this ain't the first time they've undersold the investments. At Oyster Cove in Ladysmith BC, CCWIPP sold a property that was assessed at around $107 thousand for about $95 thousand. The dudes that bought it, turned around and sold it to a couple of high-ranking federal civil servants for $123 thousand--cash. The property was assessed at $115 thousand. We all know that properties nearly always sell for well above the assessed value.
Hey, that reminds me. Didn't the UFCW's favourite lawyer buy his office at well below its assessed value?
I believe that elsewhere on this site it has been reported that Johnny Evans (son of Cliff) bought a stately manor in an upscale Toronto neighbourhood from a biz owned by Tommy Corrigan (late great head of the Canadian Textile Processors who merged with the UFCW in 1996) and a UFCW International Rep named Ralph Ortlieb.
John-boy picked up the lovely turn of the century manoir for a cool 400K. Its assessed value at the time was 440K although the market value was probably much higher. A few months later, a similar property across the street went for 900K and I'm sure Johnny's joint is worth well over a mil by now.
But did Junior buy the bricks himself, or were there other "partners"? What the hell is an Ortlieb?
Ralph Ortlieb was, at the time of the purchase, a UFCW International Rep. He was an Officer of a numbered company that sold the large stately pile of bricks to Johnny Evans. The other Officer was Thomas Corrigan (the late great head of the Canadian branch of the Textile Processors Union which merged with the UFCW in 1997 or thereabouts).
From what I've seen on file at the Toronto Land Registry office, a numbered company registered to John Evans got a mortgage for the $400,000 from the Ortlieb/Corrigan's number co. The Land Registry docs contain a notation to the effect that interest on the 400 large would be waived if it was paid off within 6 months, which it was. Nice deal.
Ortlieb is now President of UFCW Local 351 which is housed in a building in Hamilton Ontario that at one time had a connection to RHK Capital (the company connected to Ron Sins-of-the-Father Kelly) which in turn is connected to AFM Hospitality which in turn is connected to the UFCW pension plan. If I am not mistaken, Local 351 has a bunch of members that the UFCW acquired when Corrigan merged his Textile Processors into the UFCW.
Now I know that I'm probably just being overly suspicious but: A UFCW International Rep sells a hot piece of property at a real nice price and a break on the interest to the son of the former Director of UFCW Canada and current Chairman of the Investment Committee of the UFCW Canada's pension plan. Sometime thereafter, the International Rep becomes a local pres.
OK, it happens all the time right?
Isn't Ralph Ortlieb also the father of Mark Ortlieb, president of Service Employees International Union (SEIU) Local 204? Isn't that the SEIU local that Mike Fraser is so close to? Didn't Mike say a bunch of nice words at one of their meetings? Hey, isn't there some sort of "mutual aid" pact between these guys in Ontario?
Yes, during the infamous "SEIU-CAW matter" when about 30,000 disaffected SEIU members sought to exercise their right to choose their union, the SEIU and the UFCW signed a "mutual aid" pact that essentially said, "what's mine is mine and what's yours is yours and I'll help you keep yours if you help me keep mine". I have copy of the damned thing somewhere and will post it when I get around to finding it.
Mike Fraser, UFCW Canada Director was instrumental in brokering the deal that put an end to the hostilities between the SEIU and the CAW and brought the CAW back into the Canadian Labour Congress. I'll bet Mike must have held his nose long and hard given his lack of love for the CAW, but oh well, it was for the best. Better to have Buzz Hargrove back in the club than running around loose spouting all kinds of seditious stuff about union democracy. (You can find MFD's take on the deal in this archive.
Anyway, the Ortliebs and the UFC-Dubyas are pretty close. At one time there was talk on the street about a merge.
Oh and the SEIU has a defined pension plan (Nursing Homes and Related Industries Pension Plan) just like the UFCW. These guys are like twins. Hey, maybe they could merge and then CCWIPP would have an extra $300 million in funds.
I wonder what the CAW would say if the Nursing Homes and Related Industries Pension Plan and CCWIPP merged?
Hey, CAW now has a trustee on the plan, so I guess no merger will happen. And the plan actually gives members An Informative on-line Booklet.
I was just spending some time reading the CCWIPP Financials, and I noticed that the Corvis Corporation figures didn't seem to be right. The figures seem to show an increase in value when the share price was less at year end then when they were bought.
Corvis Corporation
January 2001 $21.62
July 2001? Bought in steady decline at $4.04
December 31, 2001 $3.03
Today: 72 cents
Hmmmm.....
I sure hope the FSCO audit can figure out some of this stuff for us. Hey, Cliff, if you want to, you can have Mike Freeman give an explanation. If we've made a calculation error, let us know right away, so it can be cleared up.
What kind of a bust is this? Why would they buy more a stock that was plummeting in value like that? Especially when you already have a whole bunch of shares that are losing their value? This situation once again raises the question: In whose interest?
Dynamic Opportunity Fund
Canadian Commercial Workers Industry Pension Plan
These are two money businesses with Cliff Evans in the Chair. Why such different outcomes?
Why is Cliff's nephew, Mike Fraser, paid a fortune if he's not able to manage those two UFCW-connected enterprises? If Mikey is competent enough to take over, why is he allowing money to be paid to his uncle instead of adding those duties to his leisurely work day?
That's a good question. And let's keep in mind that Evans isn't just some honourary ex-officio union leader who's allowed to hang around because no one has the heart to show him the door. The guy is still a Trustee and is also Chairman of the Investment Committee. That implies somebody with a lot of power and influence over investment decisions.
Why would the Trustees place this degree of power over investments in a guy who retired from the union over a decade ago? Come to think of it, the composition of the Investment Committee begs some answers well: Apart from Evans, who retired over a decade ago, the rest of the Committee consists of a guy who represents some unnamed "smaller employers" (Howard Preston) and a former business executive who is not employed by either the contributing employers or the union (Eugene Fraser)?
I'm curious as all hell as to how the Trustees decided that Evans, Preston and Fraser would be the pension plan's Investment Committee. Why would the Trustees choose to set up a Committee of this kind? Why not make the investment decisions themselves or hire professional fund managers to do this?
