VANCOUVER (NEWS 1130) — After months of controversy involving its board and election activity, Mountain Equipment Co-op says the Vancouver-based company is going to be sold to an American investment group.
MEC is going to be acquired by L.A.-based company Kingswood Capital Management through the Companies’ Creditors Arrangement Act, with those involved promising a “thriving future for the Canadian retailer.”
“The acquisition will strengthen MEC’s balance sheet, preserve jobs and guarantee members continued access to authentic advice and high-quality products at competitive prices,” reads a release from the MEC.
The company is Canada’s largest cooperative by membership, sporting more than 3.5 million members, though only a small number are active shoppers.
The deal still has to be approved by the B.C. Supreme Court and regulators, but it should be finalized within the next few months.
Judi Richardson, MEC’s board chair, says it was a difficult decision for the board after considering “all viable options.”
“Despite significant progress on a thoughtful turnaround strategy undertaken by new leadership, no strategy could have anticipated or overcome the impact of the global pandemic on our business.”
MEC’s board has faced scrutiny because of problems involving its board, election activity, and finances.
In April, the company had admitted its financial struggles were dire after it laid off hundreds of employees. This was several months after the company started a financial restructuring.
Then came allegations of election rigging during MEC’s annual election when it was also dealing with additional losses from the COVID-19 pandemic.
Last year, MEC reported $11.5 million in revenue loss.