The Estonian House sale is NOT a DONE DEAL! (3)
Open letter to the Estonian House Board:
It is the mandate of the newly formed not-for-profit corporation, Friends of Estonians on Broadview, dba, “Friends of Estonian House” to preserve, maintain and sustain the Estonian House on Broadview.
The resolution to sell Estonian House passed by a questionable and very slim margin. There was a rush to pass the Resolution because of a May 31st deadline with Build Toronto. We were told, in order for the Madison project to be successful, it required the selling of the Estonian House and using the proceeds to purchase the lands and construct the new Estonian community centre.
However, based on the Resolution and the attached Schedule ‘A’ presented to the shareholders during the April 25th, 2017 Special meeting, the sale of the Estonian House is based on the understanding of very important “conditions”:
1. If the due diligence is not satisfactory to all four organizations then the sale of the Estonian House does not close;
2. If proceeds from the sale of the Estonian House are insufficient to proceed with the Madison Project, purchase of 9 Madison does not close.
As shareholders and as the newly incorporated “Friends of Estonian House”, we are requesting the Estonian House Board answer the following questions:
1. Purchase and Sale Agreement (PSA) for 9 Madison was May 31st, 2017. When is the expected closing date?
2. Who has signed the PSA and purchased 9 Madison? The EH Board, the 3 Orgs or all 4 Orgs?
3. What is the final agreed upon purchase price for 9 Madison?
4. Are there any new conditions before closing the deal?
5. Is Build Toronto aware of the “conditions” for the sale of the Estonian House as per Schedule A presented to the shareholders?
6. The due diligence period was to be up to November of 2017. Two and a half months have passed, what has been done so far?
7. Please define the due diligence to be completed amounting to $750,000.00. Due diligence is a very broad term. Please outline what “due diligence” work is going to be relied upon to determine if the project will be satisfactory or not.
8. A number of professionals and business leaders have outlined that the proceeds from the sale of the EH will be insufficient based on the cost estimates of the entire Madison project and the appraised value of the Estonian House. The cash shortfall for the Madison project ranges from $3 million dollars to as high as $8 million dollars. Please provide clarity on your understanding of the potential shortfall.
9. How will EH Board cover the debt, finance the debt, cover its day-to-day operations and guarantee the shareholders, that, it will not fall into insolvency - inability to cover its obligations with the Bank and its potential creditors?
10. If EH Board is in the final stages of signing and closing 9 Madison, then the Board should be able to substantiate that the proceeds from the sale of the Estonian House will be sufficient to proceed with the Madison project as per the condition for the sale of Estonian House. Please elaborate and substantiate.
11. What is the expected appraised value anticipated for the Estonian House (958 Broadview)?
12. We are of the understanding that various members of the 4 Orgs are involved in the due diligence and purchase/ sale processes. Can you please inform the EH shareholders what members of the 4 Orgs are involved in the process and how the responsibilities are divided?
13. In the April 25th Resolutions the Board determined, based on its research and expert analysis and the Board's experience with expenses that the EH was not economically viable. A member of the Friends of Estonian House has requested access to all the studies the Board relied upon to make this determination. As of April, the information has not been forwarded. When will the information be made available?
The shareholders were hastily asked to make a momentous decision regarding the selling of the Estonian House, one of our last major Estonian assets in Toronto owned by the Estonian community. The Board had very limited information about the Madison project at that time. They did not have any answers for us then, and now, two and a half months into the due diligence period, we have not had any progress updates from the Board. The due diligence period announced was to end by November of 2017.
The Board did assure us there would be transparency and a commitment to keep the shareholders and community informed about the progress and results of the due diligence.
The Board needs to demonstrate to the shareholders and the Estonian community that this project will meet the conditions for the sale of the Estonian House and that the Madison project will not bankrupt the Corporation.
The Estonian House sale is NOT a DONE DEAL as per the “conditions” for the sale of the Estonian House as presented at the Special meeting.
The members of the EH Board have an obligation as stewards of the Corporation to ensure that they have sufficient information before them to make informed decisions. We also want to know how they arrive at all those decisions that will affect the future of the Estonian House and community.
Let's remind the Board that the Estonian House is not just their Corporation, but, it is also OUR community cultural hub, home to many non-shareholders and the beloved centre to the community at large.
We respectfully request a response within one week.
Friends of Estonian House