River City amends its offer in advance of meeting

From The Daily News of Thursday, Aug. 23, 2007 . . .

The eyes of a city and, indeed, the hockey world will be on the Interior
Savings Centre tonight and it won't have anything to do with it being Day 1
of the Kamloops Blazers’ training camp.
Rather, the long-term future of the city’s WHL franchise will be on the line
as members of the Kamloops Blazers Sports Society gather to decide whether
to sell the franchise to a five-man group that includes four ex-Blazers
players.
Vancouver businessman Tom Gaglardi and NHL players Shane Doan, Jarome
Iginla, Mark Recchi and Darryl Sydor comprise River City Hockey Inc. (RCH),
which made a $6.1-million offer to purchase the franchise July 18.
That offer was revised yesterday and RCH now says the “total offer value” is
more than $7 million.
The meeting, which starts at 7 o'clock at the ICS, is expected to deal with two items, both from a
requisition from RCH and 49 of its supporters — including former Blazers
president Colin Day, former marketing director Don Larsen and former coach
Mark Ferner — under terms of the Society Act. That requisition asked that
the society call an extraordinary general meeting to:
(a) Delete Section 22(2) of the society’s constitution and replace it with
the worlds . . . “voting is by secret ballot.” (The constitution calls for
voting to be done by a show of hands.)
(b) Accept RCH’s offer . . . to purchase the assets of the society.
A simple majority — 50 per cent plus one — will carry the vote.
Bob Smillie, the chairman of the society’s governance committee, has told
The Daily News there are 256 members eligible to vote.
After RCH’s first offer to purchase was made over a year ago, the board
convened a meeting July 11, 2006, at which members voted 49-38 not to put
the society’s assets up for sale.
At that time, there were 194 members, with 96 in attendance at the meeting.
Since then, many members who held more than one share have sold their extra
shares, most of which are believed to be in the hands of RCH supporters.
The society held a news conference Tuesday at which president Murray Owen,
Smillie and director Vic Bifano recommended the members reject RCH’s bid.
Smillie said the offer was unacceptable because the RCH offer didn’t assume
liability for the franchise’s education fund.
The revamped offer made yesterday by RCH removes that problem.
Under the amendments made to the previous offer, RCH will take “full
assumption of the education fund liability, estimated by (the accounting
firm) KPMG to be as much as $727,000.”
As well, RCH has agreed to hire all employees without severance and will
assume all severance obligations. Under the terms of the July 18 offer, the
society would have been liable for severance pay for all non-contract
employees.
At the same time, RCH has withdrawn an offer to pay members $1,000 plus five
per cent simple interest per share since the date of purchase. That
commitment was to have been deducted from the sale price; it now is
contained in a separate offer to members with RCH assuming the liability.
“Mostly because of what happened (at Tuesday’s news conference),” Gaglardi
said when asked why RCH amended its offer. “What alarmed us was when certain
members of the board simply said that even if the membership votes yes . .
. they may not sign it. That alarmed us and we wanted to make sure our offer
is clear.
“We disagree with the position they took. I don’t believe for a second our
offer prior to its amendment wasn’t capable of being accepted by the WHL . .
. the WHL doesn’t accept that agreement, the society does.
“They put the cart before the horse.”
Gaglardi, who plans on making a presentation to the membership tonight, also
told The Daily News that he has received an evaluation of “$5.25 million on
the low side and $6 million on the high side” on the franchise.
“We plan on presenting this to the members,” said Gaglardi, who said RCH
hired the Spence Evaluation Group, which he said has offices in Kelowna,
Vancouver and Toronto.
“That puts us, depending on how you account, $1 million or more over the
value,” Gaglardi said of the amended offer.
The society’s nine-man board is in receipt of one other offer. Mike
Priestner, owner of the Edmonton-based Mike Priestner Automotive Group,
forwarded a “partnership proposal” on Aug. 13. Under its terms, he would
purchase 51 per cent of the franchise for $3,626,100, leaving the society
holding the other 49 per cent. That proposal places a value on the franchise
of $7,110,000.
The Priestner offer won’t be dealt with at tonight’s meeting and, if a
decision is made to sell to RCH, won’t ever be dealt with by the society.
“We are just hoping that the board plans on running a fair meeting,”
Gaglardi said. “That’s our hope. We’re concerned about that. We have our
concerns whether they will.”