THE LARGEST financial obstacle to My Mountain Co-op’s purchase of the Shames Mountain ski facility has been removed.
The provincial government late last week approved two measures to deal with hundreds of thousands of dollars in debt and interest owed to it by the facility’s current owner, the Shames Mountain Ski Corporation, and by the co-op.
The largest amount is debt totaling $429,010.97 plus interest for a tourism development loan taken out by the ski corporation in 1988.
A proposal made by Shames Mountain to pay $125,000 for a full settlement of the loan and interest has been accepted by the province.
Shames Mountain must pay the money by Dec. 31, 2012 for the province to forgive $304,010.97 in debt plus interest.
A further $130,000 that wasn’t paid by Shames Mountain Ski Corporation in royalties for the use of Shames Mountain itself will be dealt with by a combination of forgiveness and debt restructuring.
The province will forgive the interest portion of the royalty debt which is $46,767 and the co-op has agreed to pay the remaining $88,579 spread out over the next 10 years.
Royalties paid by ski facility owners to the provincial government amount to two per cent of chairlift revenues each year as a form of rent to use the land on which the facility operates.
Shames Mountain and the co-op struck a sales deal last year in which the co-op took on responsibility for the unpaid royalties.
But the overall sales deal could not be completed until the debt owed to the province had been dealt with.
The co-op operated the mountain last year under a lease deal with the ski corporation, and was prepared to do the same this season.
News of the financial deal came out at the co-op’s Nov. 26 annual general meeting.
Provincial forests and natural resources minister Steve Thomson, the minister responsible for Crown land, said the deal enables the co-op to buy the ski hill assets, allowing it to offer a recreational outlet for the region.
“We are satisfied they have the ability to make this work.” said Thomson of the co-op. “They lined up corporate sponsors and they’re using their own resources and ideas.”
He said the province agreeing to forgive interest and write off a portion of the decades-old tourism development loan was the only realistic option it could make given the alternative.
“If the purchase agreement didn’t go through, the ski corporation would have gone into bankruptcy. There would be jobs lost and an impact on the community,” said Thomson.
The province would have ended up with the ski hill assets in its possession and would have to face any and all costs associated with their disposal, he said.
Still, Thomson said forgiving debt and interest should not be taken as a sign that other entities who owe money to the province can expect the same kind of treatment.
“This only forgives the interest. The [ski] corporation has agreed to a settlement amount and the co-op has a repayment plan,” he said.
Shames Mountain Ski Corporation president Gerry Martin said the corporation has no assets and that he and its five directors will pay the $125,000 from their own pockets.
“All of the paperwork’s been done and the approvals have been given. We’re just waiting for the [Order in Council] to be done,” he said.
An Order in Council is a document signed by cabinet ministers authorizing a specific action or activity.
Shames Mountain Ski Corporation has for years been looking for new owners for the facility located off of Hwy16 west of Terrace.
Citing continuing losses and the desire of board members, after more than 20 years of operating the facility, to retire, the corporation had been contemplating closure.
That prompted the formation of Friends of Shames to investigate ownership alternatives, resulting in the formation of the non-profit entity My Recreational Mountain Co-op last year.