VANCOUVER — The plan to thwart a deal that would see a private equity firm take retail co-op MEC private became more clear Friday as the group working to assemble a rival bid filed new court documents outlining their efforts. The documents show growing support from financial institutions, other co-operatives and high-net-worth funders, many of whom claim they weren’t given proper notice of the deal or time to come up with an alternative.

U.S.-based Kingswood Capital Management, meanwhile, continues to prepare for the acquisition, which it expects to close in mid-October, appointing an incoming president and chief operating officer.

Here are seven things we’ve learned in the past 24 hours.

1. New executive named for incoming MEC leadership

If the Kingswood deal goes through, it plans to bring on Jay Taylor as MEC’s president and chief operating officer,  incoming CEO Eric Claus told The Logic.

Taylor “is a long-time Vancouver resident and MEC member, and is an accomplished executive in the outdoor industry,” said Claus. Taylor’s track record includes launching the Hoka One One running-shoe brand in North America, he said, as well as previously owning and operating two retail ski shops in Vancouver and Whistler.

Taylor, who did not immediately respond to a request for comment, is currently chief executive at San Diego-based LALO Tactical, according to his LinkedIn profile. He’s served in the position for about seven years.

LALO “was founded to serve the needs of Special Operations Forces and NSW [Naval Special Warfare] Operators,” according to its website.

 Claus said for the most part it sells technical shoes marketed to the military, first responders and “soccer moms,” adding “it’s not a line that we will carry at MEC.”

Taylor is “a really great merchant, a super people person, is very generous, genuine and compassionate.”

2. Kingswood’s purchase price

The estimated range for Kingswood’s purchase price is $148 million to $150 million, according to the monitor’s report, but that’s not all cash.

Kingswood will pay between $107.5 million to $110 million. The difference depends on whether there is $10 million or $12.5 million available in working capital. That remains subject to a working capital adjustment mechanism that will happen at the yet-to-be determined closing date expected some time in mid-October.

Kingswood will assume at least $40.2 million in liabilities. That includes $25 million for key vendor trade payables and accruals, $13.2 million in gift card obligations and $2 million in employee obligations. It is “unknown” how much it will assume in other contractual and liabilities.

3. Funders who’ve committed millions named

A group of socially progressive investors want to help fund the alternative proposal and have raised between $15 million and $20 million so far, according to a September 25 affidavit of Kevin Harding,  spokesperson for the Save MEC group organizing the rival bid.

The group of funders includes Bill Young, founder and chairman at Social Capital Partners, and Jon Shell, managing director and partner at the same organization. Ross Beaty, founder of Pan American Silver, is also named.

Others are considering joining the group, according to a statement of interest dated September 24 and included in the court documents.

Shell, who spoke with The Logic before being publicly named, said Thursday that multiple people have offered to contribute at least $1 million to the effort for a total of almost $20 million. He declined to comment further Saturday morning.

Neither Young nor Pan American Silver, where Beaty serves as director and chairman, immediately returned a request for comment.

4. More potential institutional support

In court Thursday, Save MEC’s lawyer said the group is holding high-level discussions with executives of credit unions including Vancouver City Savings Credit Union—also known as Vancity—and banks like Concentra.

The Co-operators Group, an insurance and financial services co-op, has emerged as another party potentially interested in being part of the Save MEC bid.

“The Co-operators has given consideration as to how we might possibly support MEC and the broader co-operative network in Canada,” wrote Kathleen Howie, senior vice-president general counsel and associate secretary for the group in a letter to Save MEC’s legal counsel dated September 25 and included in court documents.

It “is interested in reviewing the mortgages and/or loans against select commercial properties owned by MEC,” she said, through its investment firm Addenda Capital. MEC owns six stores and one distribution centre that is valued at nearly $90.4 million, according to the court-appointed monitor’s report. 

That review is not meant to imply a commitment for entering a further agreement, she noted, but “should the above opportunity be of interest to MEC we would be pleased to hear from MEC.”

5. Co-op structure may be lost temporarily

The way the Save MEC proposal structures that funding, though, may see MEC lose its co-op structure for some time.

“One structure being considered is a form of convertible debt that could be paid out through the cash flow of the company, funds raised by the membership or loans provided by financial institutions,” according to the statement of interest included in the court documents.

“The goal of the structure would be to enable a turnaround plan to succeed and to ensure that MEC can be returned to a 100% Co-op over time.”

6. Hope for a member-funded model persists

Harding continues to believe in a member-funded option, explaining it’s been proven to work by other co-operatives. Toronto-based Social Share Co-op raised more than $40 million from 1,700 individuals by issuing bonds, his affidavit says, investing the funds into solar energy products and giving investors a four per cent cut.

He pegs MEC’s member base at 5.4 million—though, the monitor’s report suggests the total is higher at 5.8 million—and said he finds it “plausible” member funding could be part of a solution.

“Member financing does not need to include all members in order to raise significant amounts of capital,” his affidavit reads.

He estimates active members, or those who purchased something from MEC recently, at 25 per cent to 40 per cent of total membership. At $10 each, a group of that size could raise between $13.5 million and $21.6 million.

MEC, however, rejected the idea long before arriving at the Kingswood deal as the best solution to its financial woes. In court documents, it said it determined the idea would require “all or virtually all active members to participate” and was “impracticable to impossible.”

After members learned about the sale and galvanized to build a counter offer, board member and special committee chair Robert Wallis said their effort “does not seem to appreciate the gravity of MEC’s financial difficulties,” in his affidavit made September 22.

7. Co-op support beyond Canada’s borders

The Canadian Co-operative Investment Fund, which helps Canadian co-ops with alternative capital sources, sent Harding a letter that “indicates support and interest in supporting a viable alternative,” according to his affidavit.

The letter says, “The CCIF is motivated to work with value-aligned co-operative and other parties to determine whether there is an alternative approach to resolving the financial issues facing MEC and supporting its continued operations as a co-operative.” 

But it requires time to assess the company’s financial situation—a position echoed by all parties involved in the alternate proposal. Harding’s lawyer will seek a two-week adjournment in court Monday to give Save MEC time to look at the retailer’s confidential financial information and finalize their offer.

While it understands the urgency in finding a solution, CCIF says it also recognizes “that viable alternatives that engage the co-operative sector and funds such as CCIF have not been fully explored.”

It can “work with expediency with other aligned parties to conduct diligence and to make a determination whether there is a viable co-operative-driven alternative that can be developed that provides for resolution of the financial situation facing MEC and a better long-term outcome for MEC and its current membership.”

The International Co-operative Alliance is also standing in solidarity with MEC’s members fighting to save the co-op from becoming a private company.

A letter from Director General Bruno Roelants reads that the members need a say on any possible sale.

“Allowing MEC to maintain its cooperative value and identity will be in the interest of not only its members-owners but also of the surrounding communities and of Canadian economy and society as a whole,” it reads.

“We are with you! We trust you will find the solution! Be strong!”