More news from HVR - No more golf? (for now)

Further news from Newfound NV, and Humber Valley Resort. The following letter is from Derrick White the President of Newfound Canada - sent midday 8th Sept. The big surprise is the mention of "winding down and closing" the golf operation, amongst other services. That said, the devil is (as always) in the detail.

It's all very sad - however if its part of a more co-ordinated plan, then it's hopefully a short term pain for a longer term gain for everyone involved including the local economy. Several of the people we've met in the last few days have commented that they wanted big changes for a number of years.

One of the key changes in our view is the need to enable new international routes through Deer Lake airport (& Stephenville if it can attract them!). And one last comment - on various other news services we keep hearing that Europeans want subsided flights to Newfoundland (it was even said on CBC radio1 by a Brit this morning!) - but it's not what's wanted. What we ALL want is simply international routes to be available and flown - not subsidised!

Then again of course to run a flight route requires guarantees - and that's where the provincial government can help. However the passengers are not wanting subsidies!



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HUMBER VALLEY RESORT CORPORATION - CCAA Protection

It is with considerable regret, but with a determination to move forward, that we write this letter to you.As we are sure you are aware, an intensive review of HVRC, its liabilities both fiscal and legal, has taken place. During this process the company has consulted with outside advisors, the Government of Newfoundland and Labrador, and indeed, many of our owners.



The resultant analysis confirms our initial suspicion that HVRC is technically unviable and whilst historic contractual obligations remain, it will always have a liability that is impossible to remedy. Initial attempts to restructure to bring the overhead to a manageable level, met with considerable opposition, threats, implied and actual, of litigation and actually uncovered other breaches that had not been previously documented. The cost of resolution was far greater than the whole asset value of the company.



As per our press release of Friday, September 5, 2008, the company has sought and obtained protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA). The CCAA is a Canadian federal Act that gives financially troubled corporations the opportunity to restructure their affairs through a formal plan of arrangement. This process was begun with a formal application to the Supreme Court of Newfoundland and Labrador where HVRC applied for protection under the CCAA. The court has issued an Order giving HVRC 30 days of protection from its creditors to allow for the preparation of the plan of arrangement. Once the plan has been prepared, the Company will update the market. We did not make this decision lightly. The alternative was to apply for full receivership, and to wind up HVRC. We did not feel that this was in anyone’s interests. Under the terms of the CCAA as previously described, we are able to submit to the court appointed monitor, a plan showing how we may move forward and finally deliver a sustainable resort that is financially stable, which we fully intend to do. Within this process, each of you will have a formal opportunity to submit any claims you feel that you may have to the court appointed Monitor. Ernst & Young Inc. have been appointed as our Monitor.



This action will result in immediate and tangible changes to the operation of the resort. In the coming days the resort will wind down and close the following onsite operations and services: the accommodations, food and beverage, activities and golf. Strawberry Hill will also be closing its rental pool and manor house operations. Flights from Gatwick to Deer Lake will continue as per the scheduled dates on September 11 and 18. The company is presently working hard, as are other local business organizations, all in consultation with the Government of Newfoundland and Labrador, to find a solution to continue the intended winter flight series. At this time we are unable to confirm whether the winter series flights will go ahead. Once a formal determination is made, we shall advise accordingly.



You will undoubtedly have many questions and we will do our best to address them over the coming days. We have formed a team of employees that will address your issues and concerns and each of you will be given a contact name with whom you can communicate directly at the resort. Also, later today, a “Question and Answer” package will be provided along with information regarding the CCAA process.



During the past few days, the company as its first priority engaged in securing and protecting your assets on the resort. At the time of writing, this process continues. As we take this step, we are mindful that it creates a situation that leaves many of you with uncertainty and concern. Please know, that your interests as owners remain a primary consideration as we develop our restructuring plan and move forward.



Regards

Derrick White
President, Newfound Canada