‘No strategy could have anticipated or overcome the impact of the global pandemic on our business’
Author of the article:
Financial Post Staff
Sep 15, 2020 • • 2 minute read
Canadian outdoor equipment chain Mountain Equipment Co-op, announced Monday that its board has reached an agreement for Kingswood Capital Management to acquire all of its assets.
MEC said the deal with the Los Angeles-based private investment firm, through the Companies’ Creditors Arrangement Act (CCAA), was needed to ensure a stable future for the retail chain.
“Persistent financial challenges’ in recent years along with the disruption of the COVID-19 pandemic impacted MEC’s ability to secure refinancing. After looking at a number of options, a special committee recommended Kingswood’s offer.
Real Life. Real News. Real Voices
Help us tell more of the stories that matterBecome a founding member
The transition from a co-operative to a subsidiary of Kingswood will strengthen MEC’s balance sheet, preserve jobs and keep the retail operations open, it said in a statement.
Established in 1971, MEC has been Canada’s largest consumer co-operative with over 5 million members across the country.
“After careful consideration of all viable options, the board made this difficult decision,” said MEC’s board chair Judi Richardson. “Despite significant progress on a thoughtful turnaround strategy undertaken by new leadership, no strategy could have anticipated or overcome the impact of the global pandemic on our business.”
Kingswood has committed to acquire the majority of retail stores, and under the court protection of CCAA, MEC will continue to operate until the transition is completed. The deal is expected to close in the fourth quarter of 2020. Financial details were not disclosed.
MEC member and Canadian, Eric Claus, will lead Kingswood’s newly formed Canadian affiliate as board chair and CEO.
“MEC is an iconic brand founded on strong values and has a loyal following,” said Kingswood’s Managing Partner, Alex Wolf. “We have tremendous respect for those values and the loyal membership and are honoured to be partnering with Canadian operating partners who will represent us on the ground in Canada working with MEC’s management team following the closing to ensure a bright future for MEC.”
Subscribe to the newsletter news
We hate SPAM and promise to keep your email address safe