Claims 1/3 of restaurant chain
Winnipeg Free Press
Friday, April 7th, 2006
By Dan Lett
THE Crocus Investment Fund is -- for the time being at least -- the largest shareholder of Salisbury House Restaurants of Canada.
Salisbury House officials confirmed that a court-appointed receiver has laid claim to about one third of the shares in the restaurant chain, the result of a security agreement with a related company.
However, Crocus has not yet met its portion of a $500,000 cash-call to shareholders that was issued to stave off a receivership of Salisbury House.
Salisbury House can either meet the cash call or sell its shares.
"Crocus has informed us they are in control of those shares," said Earl Barish, president and CEO of the numbered company that controls Salisbury House. "We've extended Crocus some time to make up their minds about what they want to do."
Crocus came to own shares in Salisbury House thanks to a large investment in a related company, Maple Leaf Distillers.
From 2000 to 2004, Crocus invested $8.4 million in Maple Leaf. Part of that investment came in the form of a guarantee on a $1 million of a line of credit Maple Leaf obtained from Astra Credit Union. Principals of Maple Leaf lodged shares in Salisbury House as security for the line of credit guarantee.
Sources confirmed Astra recently demanded payment from Crocus on the line of credit, which automatically made Crocus a Salisbury House shareholder.
Russ Holmes, the Crocus receiver, could not be reached for comment.
Meanwhile, a deal to sell the remaining assets of Maple Leaf Distillers could be completed by the end of April, a court-appointed receiver has confirmed.
Rob McMahon, of Ernst & Young, said in an interview that negotiations are continuing, but he expects to reach a deal with Angostura Ltd. for the sale of most of the company's assets within the next few weeks.
McMahon said once a deal is complete, he will report back to the Manitoba Court of Queen's Bench for approval. If the court gives the go-ahead, McMahon will prepare a recommendation for the court on how proceeds of the sale should be distributed.
Maple Leaf Distillers and a related company, Protos International, were put into receivership in January. Secured and unsecured creditors have claimed more than $17 million against the distillery.
McMahon has said previously that the proceeds of the sale of assets will be enough to cover only the largest secured creditors.
dan.lett@freepress.mb.ca