Boundary Sawmills secures loan to meet Aug. 31 deadline for C$1M payment to complete purchase of Midway Forest Products in British Columbia from Fox Lumber
GRAND FORKS, British Columbia
August 29, 2011
(Grand Forks Gazette)
– With a deadline for a $1-million mortgage payment on the Midway mill looming, Boundary Sawmills Inc. (BSI) will not default.
Both BSI President Doug McMynn and Stephen Hill, a financial planner, confirmed that money had been secured and the mortgage payment would be made by the Aug. 31 deadline.
"What we've done is work with the Heritage Credit Union, who has worked with us before in the initial offering helping people do their RSPs, and we've managed to work with them to come up with a low-interest, low-principal loan to complete the deal with Tom Fox (president of Fox Forest Products, former mill site owner) by Aug. 31," explained McMynn
"Because of holidays, we are going to begin with them to clean up a second loan, which is through the Southern Interior Development Initiative Trust, which is about $800,000, and we're going to combine the two in about six weeks to one loan that is workable for us to make the payment on and continue to raise funds."
McMynn said that BSI had hoped that it could raise enough funds through shareholders – people buying into the Venture Capital Corporation – to pay it all off but that didn't happen.
BSI worked with the Heritage Credit Union to work out a loan payment structure that was beneficial to shareholders and to the company and to Vaagen Bros. Lumber, who is leasing the mill site, so it wouldn't default on the mortgage.
"What people need to understand is, it's still just a loan. We still have to sell the shares to pay back on the mortgage," explained Hill, adding that he felt relief that the Aug. 31 payment that would be made.
McMynn echoed Hill's sentiment and said that in the end, BSI has created 50 jobs without help from the government.
"I think that's remarkable for any community in the West Boundary (and one the size of Midway) to bring back a mill to create the jobs."
BSI's president said that the proverbial road in getting the mill back and running has been bumpy but doesn't foresee any other problems arising.
"Once we finish with the Heritage Credit Union, we're pretty much rock solid. We just go along with what the lease agreement is with the Vaagens and they have the option to purchase the property at the end of the fifth or beginning of the sixth year and they may exercise that or they may not exercise that," he said.
"Either way, right now the way it works is because we've paid off Tom Fox, we haven't defaulted with our lease or with the mortgage and therefore we have 100 per cent of the lease payments coming from Vaagen and 100 per cent of the royalties coming to us too."
McMynn said that investors would still be sought.