We previously reported that the announcement of the sale of Canada’s largest outdoor chain with 21 doors, Mountain Equipment Co-op (MEC), to Kingswood Capital Management, a Los Angeles-based private equity firm, sparked widespread discussions and even outrage among Co-op members across Canada.
This week, Kingswood Capital announced that it has completed the acquisition of substantially all of MEC’s assets through the company’s Creditors Arrangement Act. According to both parties, the acquisition provides MEC with a way forward to strengthen its brand, preserve jobs and enable the company to continue to be an outdoor supplier to all Canadians.
MEC will be managed from its Vancouver headquarters by Eric Claus, the new CEO and a long-time MEC member, who replaces Phil Arrata. Claus served as U.S. and Canadian President of the supermarket company A&P for seven years and then managed a variety of grocery retailers including Save-A-Lot, Red Apple and Co-Op Atlantic, most recently in Nova Scotia on Canada’s east coast. The news of the takeover prompted many members of the cooperative to wonder if they would get their cooperative shares - about CAN$5 - back. During the transition from a cooperative to a private company, members would have to act as creditors to claim their $5 worth of shares. Claus told the Canadian news station CBC that it is “highly unlikely” that the members would get their share value back.