As part of my coverage of the ructions in Ben Eoin, I submitted an access to information request to the Atlantic Canada Opportunities Agency (ACOA) for a copy of the contract between Enterprise Cape Breton Corporation (ECBC) and Ben Eoin Golf Club Limited. I also asked for any correspondence concerning the repayment schedule for the equity investment governed by the contract.
I will attach all the information I received below (after I discuss a few aspects of it in greater detail) but first I wanted to note something that jumped out at me immediately from these documents and that was the sheer number of changes that took place on the investor (read: government) side of this contract between the presentation of the letter of offer in 2006 and the signing of the third (and apparently final) amendment in 2008.
The initial letter of offer was signed in May 2006 by Rick Beaton, chief executive officer of ECBC — and of the Cape Breton Growth Fund Corporation (CBGF), the vehicle through which the investment was initially to be made.
The first amendment to the letter of offer, dated October 2006, was signed by Tom Rankin, chairman of the CBGF (according to this 2006 report to parliament, Rankin was the “acting chairperson” of the CBGF — funny the gender-neutral language didn’t find its way to Cape Breton).
The second amendment, dated May 2008, was made necessary because, as of 12:00 AM Atlantic Standard Time on 1 April 2008, the growth fund was dissolved and ECBC took over its assets and liabilities – including the letter of offer to the golf club. This amendment was signed by Marlene Usher, the acting CEO of ECBC.
The third amendment (this time labelled a “contract amendment”), dated August 2008, was signed by John K. Lynn, CEO of ECBC.
(Interestingly, there was no additional amendment dating to 2014, when ECBC was itself dissolved and its assets and liabilities taken over by ACOA.)
Here are a few other points I thought worth mentioning.
Unique association
The fact that the golf course would share facilities with the Cape Breton Ski Club was given big play in the project description — a description that remained unchanged throughout the various iterations of the letter of offer/contract:
Interesting that what was a feature in 2006 had become a bug by 2018 when the Ben Eoin Development Group (BEDG) began building separate facilities — pro-shop and dining area — for the golf club before it had even moved to buy it.
Inflation?
The costs associated with the project — and the size of the equity investment — grew significantly between 2006 and 2008. No explanation is provided anywhere in these documents for the increase in most items (or the decrease in the price of the land).
As a result of this overall increase, the value of the equity investment rose by $500,000 to $3.5 million.
| Original Agreement (10 May 2006) | Amendment No. 3 (12 August 2008) | +/- % Change | |
|---|---|---|---|
| Total Project Costs | |||
| Land | $900,000 | $640,000 | -29 |
| Existing Facilities | $1,000,000 | $1,000,000 | 0 |
| Course Construction | $4,438,000 | $5,065,000 | +14 |
| Buildings & Infrastructure | $850,000 | $1,510,000 | +78 |
| Equipment | $500,000 | $600,000 | +20 |
| Other | $812,000 | $955,000 | +18 |
| Total Project Costs | $8,500,000 | $9,770,000 | +15 |
| Financing Proposed | |||
| CBGF/ECBC Equity Investment | $3,000,000 | $3,500,000 | +17 |
| Shareholder Equity | $3,500,000 | $4,210,000 | +20 |
| Term Debt | $1,000,000 | $1,000,000 | 0 |
| In Kind | $1,000,000 | $1,000,000 | 0 |
| Existing Working Capital | $60,000 | +100 | |
| Total Financing | $8,500,000 | $9,770,000 | +15 |
| Eligible Project Costs (Course Construction, Buildings & Infrastructure, Equipment & Other) | $6,600,000 | $7,700,000 | +15 |
| Total Eligible Project Costs | $6,600,000 | $7,700,000 | +15 |
Competition
The initial offer addressed the issue of unfair competition with the island’s other golf courses (the ones not getting a $3.5 million equity investment from the government) by limiting the number of members the Ben Eoin Club could have:
This was another area that changed significantly from the initial letter of offer to the final contract — and one of the only items that actually caused someone to scribble all over the agreement. By 2006, the clause read:
By the time ECBC was taking over responsibility for the letter of offer in 2008, it had changed again:
And in the final version of the agreement with ECBC:
From 175 members to 393 is an increase of 125%.
Community
A clause introduced in the first amendment seemed to acknowledge that a golf course on the receiving end of so much public investment should offer the public something in return, hence this addition:
But by the time John Lynn was signing the 2008 version on behalf of ECBC, this had been walked back:
Fab Four
There’s a funny little clause tucked into the final, 2008 agreement which requires the Ben Eoin Golf Club to join the Beatles.
JK! It’s supposed to join the “Fabulous Foursome”:
How, exactly, one would add a fifth member to a “Fabulous Foursome” is not explained, but seems not to have mattered in the end, because I don’t think The Lakes ever did join the grouping, identified in this 2001 golf review as: Highland Links, Bell Bay, Le Portage and Dundee.
The “Fabulous Foursome” designation doesn’t seem to be in use any longer (perhaps because Cabot Cliffs and Cabot Links proved more fabulous) but those four courses still figure prominently on Destination Cape Breton’s dedicated golf website — a website from which The Lakes is strangely absent as illustrated by this map:
Source: Destination Cape Breton
Knowing something about the way Destination Cape Breton works, I presume this is because The Lakes didn’t pay to be included — although it does rate a brief mention:
True links golf, lively Celtic music, place names like Inverness and Ben Eoin, single malt whisky. You can be forgiven for thinking we were describing Scotland.
I wonder what The Lakes’ marketing strategy is, and why participating in Destination Cape Breton’s golf-promoting efforts just doesn’t cut it?
Liquidation
I think it’s also worth mentioning that the sale of the Golf Club seems to be a condition under which ECBC (now ACOA) would be entitled to “payment in full of the par value of any remaining Class “A” Preference Shares” — in other words, to full repayment of any outstanding portion of its $3.5 million loan.
Presumably, the Ben Eoin Development Group (BEDG) has been assured it does not need to worry about this.
Environment
Remember when I was writing about the environmental issues surrounding golf courses and noted that the Audubon Society has a certification program for clubs that minimize their impact on the environment — particularly on wildlife?
Remember I noted that both Cabot Cliffs and Cabot Links have this certification?
Well, it turns out The Lakes was advised to “consider” seeking such certification too:
I guess they “considered” it and then said, “Nah.”
Distributable income
The last few documents are dunning letters from ACOA to Ben Eoin Golf Limited, the first dated 21 December 2017.
They shed some light on why the club was expected to begin repaying its loan, despite its shaky finances. In a 15 January 2018 letter from Joe Cashin, ACOA’s director of enterprise development, to someone (the name has been redacted) at Ben Eoin Golf, Cashin explains that under the Preference Share Conditions outlined in Annex 3 in the May 2006 letter of offer, the club has “met the terms necessary for a payment to the Agency from distributable income.”
You see, the club doesn’t have to make a profit to trigger repayment — it just needs to register distributable income, which Cashin says it did in 2016, according to the following calculation:
As you can see, the club actually lost $229,043 in 2016, but depreciation has resulted in distributable income — 45.5% of which belongs to ACOA.
Doc drop
There may be more of interest in these documents (and if you find something, please do get in touch).
Now, have at:
Ben_Eoin_Golf_contract
Hey, while we’ve got you here, can we just say thanks for reading the Spectator? We’re always glad to see you.
That said, if you wanted to make us dance a (virtual) jig of joy, please consider subscribing. You can find out more about what we’re all about here, before cruising on over to the Subscriptions Page, where you can choose from a fine selection of possibilities — including a joint subscription with the Halifax Examiner. And right now, if you take out a regular, annual subscription to the Spectator ($100) or a joint annual Spectator/Examiner subscription ($160), you’ll get a free gift — yes, you read that correctly, the Spectator’s got swag!
Prefer to monitor the situation awhile longer? Not quite ready to commit? Why not sign up for our weekly newsletter to find out what’s been newly released from behind the paywall (and give us a chance to win you over)?
Thanks for listening! We now return you to your regularly scheduled web browsing…
