Walton Ontario Land L.P. 1 Reports Second Quarter 2017 Fiscal Results

CALGARY, Alberta--()--Walton Ontario Land L.P. 1 (the “Partnership”) and its general partner, Walton Ontario Land 1 Corporation (the “General Partner”) announced today the Partnership’s results for the three and six months of 2017. Launched in January 2010, the Partnership’s objective is to maximize returns to limited partners through the management of, concept planning on, and eventual sale of properties. The Partnership currently has an interest in a single parcel of land, comprised of 300 acres located in the southwest quadrant of the City of Ottawa (the “Property”).

The City of Ottawa’s Planning and Growth Management Department undertook a work program in the second half of 2016 and completed the Land Evaluation and Area Review and Employment Lands Study in accordance with the decision issued by the Ontario Municipal Board (“OMB”) on February 23, 2016 pursuant to an appeal filed in 2015 by the Partnership with the OMB to dispute the City’s decision not to expand the municipal boundary of the City to include the Ottawa Property. On behalf of the Partnership and as a stakeholder in the process, management reviewed the conclusions and recommendations of these reports and made a written submission to the Planning Committee in November 2016 continuing to advocate for an appropriate range and mix of available lands and the need for the City to consider comprehensively planned mixed-use opportunities outside of the existing boundary as part of the qualitative and quantitative assessment to change the current designation for certain Employment and Enterprise Area lands to General Urban Area.

The Planning Committee recommended that City Council adopt the population, household and employment projections to 2036, Ottawa Employment Land Review Final Report, Growth Projections for Ottawa 2014-2036, City of Ottawa Land Evaluation and Area Review for Agriculture and an Official Plan Amendment (“OPA”) that does not include an expansion to the urban boundary. These recommendations were presented and carried, as amended, by City Council on December 14, 2016. A Notice of Decision was issued by the Ministry of Municipal Affairs on August 10, 2017 stating a decision was made to approve the OPA (OPA 180). Although Management of the Partnership continue to believe that the Ottawa Property has excellent attributes to accommodate a future employment and mixed use development opportunity and is well suited for an urban boundary expansion, an appeal to the OPA will not be filed.

As a result of the ongoing appeal and related planning processes associated with the Official Plan, the time frame for the Partnership to hold its interest in the Ottawa Property as an investment has exceeded the original anticipated two to four year time horizon.

Companies’ Creditor Arrangement Act (“CCAA”) Status Update

On April 28, 2017, Walton Ontario Land 1 Corporation, (the ‘General Partner’), the General Partner of the Partnership, Walton International Group Inc. (“WIGI”), and certain affiliates, (the “CCAA Entities”), including the general partner of Walton Development and Management Development L.P (“WDM”) voluntarily filed and obtained creditor protection under the CCAA pursuant to an order (the “Initial Order”) granted by the Court of Queen’s Bench of Alberta (the “Court”).

The Initial Order authorized the CCAA Entities to begin a court-supervised restructuring and provides for a broad stay of proceedings against the CCAA Entities in order to provide the opportunity to formulate and present a plan of arrangement under the CCAA to WIGI’s creditors for approval. While the Partnership is not a CCAA Entity, it is covered by the stay of proceedings. Under the terms of the Initial Order, Ernst & Young Inc. will serve as the Court-appointed monitor (the “Monitor”) of the CCAA Entities.

On May 9, 2017, the Partnership obtained a Court Order (the “Order”) for the implementation of a sale and investment solicitation process (the “SISP”) to be conducted within the CCAA proceedings under the supervision of the Monitor, which was to be used to solicit interest from one or more potential purchasers and/or investors in the Partnership’s business and/or Ottawa Property or to identify potential alternative financing. The SISP set forth the manner which potential purchasers/investors submitted bids, including the applicable deadlines for the submission bids. The SISP launched on June 6, 2017 and initial bids were received on July 25, 2017. The Partnership received one non-binding letter of intent (“LOI”) for the acquisition of the Ottawa Property. The LOI was compared to third party appraisals and recent comparable sales transaction in the same geographical area. The Partnership and the Monitor agreed that the LOI was materially lower than fair market value of those lands and therefore the party submitting the bid was not deemed to be a qualified bidder for the purposes of proceeding to Phase 2 of the SISP.

On August 15, 2017, the Court granted an Order (the “August 15 Order”) extending the period of the stay of proceedings as against the CCAA Entities, including the Partnership, from August 15, 2017 up to and including November 30, 2017 (the “Stay Period”). The August 15, 2017 Order further approved the termination of the SISP with respect to the Partnership. The termination of the SISP will allow the Partnership, with the assistance of the Monitor, to explore other approaches to monetize the value of the Ottawa Property.

If the Partnership is unable to complete a sale of the Ottawa Property or restructuring of the Partnership, and the current stay of proceedings expires or is lifted, substantially all obligations of the Partnership, including amounts due to WIGI, will then be due and payable immediately, or subject to acceleration, creating an immediate liquidity crisis and creditors would be permitted to exert their pre-existing rights against the Partnership.

Second Quarter Financial Results

During the three and six months ended June 30, 2017, and June 30, 2016, the Partnership did not recognize any revenue relating to land sales and incurred no cost of sales. The Partnership is not expected to generate significant revenues, except when the Ottawa Property is sold.

During the three months ended June 30, 2017, the Partnership realized a net loss of $225,752 compared to a net loss of $200,174 for the three months ended June 30, 2016. Total expenses have increased by $25,112, primarily the result of an increase of $31,004 in professional fees relating primarily to the Partnership engaging third party corporate secretary services that had previously been provided by WIGI for no additional charge and legal advice associated with the CCAA filing. This has been offset by a decrease in director fees in the three months ended June 30, 2017 of $13,076 due to the entity having only one independent director during the second quarter of 2017, compared to having two independent directors in the second quarter of 2016.

During the six months ended June 30, 2017, the Partnership realized a net loss of $444,812 compared to a net loss of $407,710 for the six months ended June 30, 2016. Total expenses have increased by $36,317, primarily the result of an increase of $41,940 in professional fees relating to the Partnership engaging third party corporate secretary services that had previously been provided by WIGI for no additional charge and legal advice associated with the CCAA filing, and an increase of $9,560 for bad debt expense relating to amounts due from WIGI for lease income. The bad debt expense has been recorded as WIGI filed and received protection under CCAA on April 28, 2017. These amounts have been stayed and the Partnership will need to file a claim as an unsecured creditor. If WIGI is successful in its restructuring, and as new information becomes available indicating that the Partnership will recover the amounts owing, the allowance will be reversed up to the amount of the impairment. There is no assurance that WIGI’s restructuring plan will be successful or sufficient for the Partnership to recover the full amount of the receivable, if at all. This has been offset by a decrease in director fees in the six months ended June 30, 2017 of $13,076 due to the entity having only one independent director during the second quarter of 2017, compared to having two independent directors in the second quarter of 2016.

Additional Information

The Partnership is managed by WIGI which is a member of the Walton Group of Companies.

The Walton Group of Companies (“Walton”) is a multinational real estate investment, planning, and development group concentrating on the research, acquisition, administration, planning and development of strategically located land in major North American growth corridors.

Walton has been in business for over 35 years and takes a long-term approach to land planning and development. Walton’s industry-leading expertise in real estate investment, land planning and development uniquely positions Walton to responsibly transition land into sustainable communities where people live, work and play.

Its communities are comprehensively designed in collaboration with local residents for the benefit of community stakeholders. Its goal is to build communities that will stand the test of time: hometowns for present and future generations.

For more information about Walton Ontario Land L.P. 1, please visit www.sedar.com. For more information about Walton, visit www.Walton.com.

This news release, required by Canadian laws, does not constitute an offer of securities, and is not for distribution or dissemination outside Canada. This news release contains forward looking information, and actual future results may differ from what is disclosed in this news release. The risks, uncertainties and other factors that could influence results are described in the prospectus and other documents filed with Canadian securities regulatory authorities and available online at www.sedar.com.

Except as otherwise noted, all amounts are in Canadian dollars, and are based on unaudited financial statements for the three months ended June 30, 2017 and related notes, prepared in accordance with International Financial Reporting Standards.

Contacts

For media inquiries, please contact: Bill Doherty
Office: 1.866.925.8668
Email: info@walton.com

Contacts

For media inquiries, please contact: Bill Doherty
Office: 1.866.925.8668
Email: info@walton.com