Message from the President – September 2018
It is with immense pride that we announce the beginning of a new era for our Community. The opportunity to be, for the first time in generations, debt free. Free from the heavy obligation to disburse close to $800,000 a year for servicing of the debt.
On Monday, September 17, 2018, during a Special Meeting, the members of the Board of Directors and I, took a historic decision by which will have the effect of drastically changing the financial situation of the HCGM for years to come.
We decided to accept a $10,000,000 unconditional and binding offer to purchase the HCGM’s rights to the emphyteutic lease on the land situated on the block bounded by corners of Saint-Laurent, Sherbrooke and Clark (the hotel) from TIDAN Inc., the lessee and current owner of hotel building erected thereon.
It is the responsibility of the HCGM Administration to continuously evaluate the financial situation of the Community and to constantly find ways to ensure the viability of its operations. Over the last 30 years, the Organization was involved in a very aggressive expansion in order to serve the needs of the members of the community. Community centers, schools, churches and athletic facilities were built and or purchased with limited funds raised through fundraising efforts. The largest part of this aggressive expansion was financed through loans. Most of it has been paid down over the years, but a large portion ($7,300,000) is still outstanding.
Every financial analyst and consultant that has examined the finances of the Community over the years has reached the same conclusion: the HCGM is rich in real estate assets by unable to meet its financial obligations on a constant basis. The HCGM external auditors (currently Ernst & Young) indicate every year (for at least the last 20 years) in the notes attached to the financial statements that the Organization has negative Fund balances and that a Going Concern Uncertainty exists. A very serious observation that in reality means that it is uncertain if the Community will be able to continue operating under the circumstances that currently exist.
Therefore, we seriously considered the option of selling an asset to pay down the debt and to improve the cash flow in order to further enhance the services to the members, to the students, the parents; the approximately 10,000 people that the Community serves on a weekly basis and thus ensuring the continuation of the Community’s operations well into the future.
Almost all assets owned by the Community are servicing the needs of its members, with the exception of one: the emphyteutic lease on the Hotel property. Since the beginning of the current Administration’s mandate, a search of the market for the purpose of selling this asset was initiated. Evaluations, approaching various real estate brokers, contacting potential investors were among some of the efforts put in place in order to establish market the value of the asset and to attract potential buyers.
Finally, after vigorous and arduous negotiations with the only party that had seriously and continuously expressed interest in buying the asset, we were able to get the aforementioned offer of $10,000,000.
In an effort to maximize the value of the asset, we further initiated discussions with a second party that had expressed an interest, resulting in a second offer to purchase the emphyteutic lease for $10,200,000. However, this offer was conditional and not binding as it permits the potential purchaser if he is not satisfied, it’s in his sole and absolute discretion with any of the conditions, to walk away from the offer. The Board of Directors for obvious reasons rejected this offer since it was uncertain if the promise to purchase would actually be concluded, and if it were concluded, if it would be at the price offered. Instead, the Board of Directors made a financially prudent and responsible decision to approve the unconditional binding offer for $10,000,000.
This is the time to look forward to a promising future for our Community. Debt free, with an improvement of $800,000 to our cash flow annually, with approximately $2,700,000 remaining after the paying down debt to be invested in future capital projects, such as the educational complex on the Holy Cross land in Laval.
I invite all of you to become part of this new era for our Community. Come and join us in getting rid of the heavy burden of debt. Help us to economize $800,000 in cash flow annually, become a part of realizing the dream of the new educational project in Laval. Let’s build a sound financial basis for a bright future.
Holding on to an asset that produces a minimal return (1.6% of the current market value – less than the rate of inflation) is not a sound financial decision, nor is holding on to the asset for another 35 years and hoping that the value will grow astronomically. Today we are facing financial uncertainty, today we need a positive cash flow to move forward and now is the time that we need to invest in the future of our schools.
The General Assembly to approve acceptance of the unconditional binding offer is scheduled for October 14, 2018, 12:00 hrs at Holy Cross Hall, 4865 du Souvenir, Laval.
United we can move mountains. And now is the time to do what we cannot do and not what we can do. Now is the time to leave the past in the past, to be bold, forge a new path and set a new course for generations to come.
Nicholas T. Pagonis