The Mystic Mountain attraction has been put up for sale in a bid to raise funds to pay its bondholder, Sky-High Holdings Limited, which has still not recouped its $1.3-billion investment after several court battles and bankruptcy proceedings that resulted in the operating company Mystic Mountain Limited, MML, being declared bankrupt and placed in receivership earlier this year.
“The current solution is a public sale of the company’s assets and operations, which commenced two months ago and is expected to close in forthcoming months,” receiver Wilfred Baghaloo of accounting and tax advisory firm PricewaterhouseCoopers told the Financial Gleaner via email on Thursday.
“No payment has been made to any pre-receivership creditors. All pre-receivership creditors are crystallised until we have a solution on the way forward,” he added.
The company was certified bankrupt in February by the government’s Office of the Supervisor of Insolvency, after the majority of its creditors rejected a proposal that sought more time to make good on MML’s then approximately $1.3-billion debt to Sky-High Holdings Limited, whose directors are hotel mogul Adam Stewart and businessman Ian Haynes.
Sky-High appointed Baghaloo as receiver on February 8 to secure its interest.
“Since my appointment, I have implemented procedures to stabilise the company’s operations and the tenure of over 120 workers. Having stabilised the company, I have started the process of seeking a buyer/operator for the company’s assets and operations,” Baghaloo explained.
He said the sale is being marketed in Jamaica, the Caribbean region and elsewhere overseas, with the result so far being the receipt of a few expressions of interest from parties, which are now doing due diligence before submitting bids by the stated deadline of June 20, 2022.
“Once we receive the bids, a preferred bidder will be selected and negotiations commenced thereafter, including the sharing of other confidential documents germane to a final decision-making. At this stage we believe we will receive bids on or by June 20, 2022. My primary objective is to maximise the company’s assets and operations value for the various creditors, in accordance to the Insolvency and Companies Acts,” Baghaloo added.
He pointed out that the majority shareholders and their representatives continue to be part of the daily operation of the company. The business is wholly owned by Karibukai Limited. However, its ultimate parent is Rainforest Adventure Holdings Limited, RFA, which holds a majority stake in Karibukai.
“They are at liberty to settle the company’s debt at their convenience, and they are also at liberty to participate in the bidding/sale process. I am not sure of their intent,” Baghaloo said in response to Financial Gleaner questions about the response of MML’s majority owners since the business was placed in receivership.
He added that despite the challenges of bankruptcy, receivership and the COVID-19 pandemic, the business has continued to perform “fairly well”.
“We are currently at 60 per cent to 70 per cent of 2019 visitors numbers, which speaks volumes to the company’s attractiveness despite the challenging environment. The future depends on the development/operational plans of the potential new owners, the performance of the tourism sector, and the local competitive environment. I believe this is a good asset for experienced tourism managers and the returns can be quite attractive, given the cash flow of the entity,” Baghaloo said of the business’ long-term outlook.
In accounts submitted as part of its bankruptcy-protection filings, MML stated that as at December 2021 it had US$17.62 million in total assets, with the plant and equipment of the Mystic Mountain attraction in Ocho Rios accounting for US$12.25 million of that amount.
The company reported US$11.38 million in liabilities, of which US$7.87 million, or $1.26 billion, was said to be owed to the bondholder and $42 million to the bondholders’ representatives, JCSD Trustee Services Limited. Its unsecured debt at the time was said to have included a near US$1-million short-term loan from Sygnus Capital Limited, trade payables and other liabilities of US$1.5 million, including deferred taxes of about US$81,000, and a long-term loan of approximately US$804,000 from Josef Wiegand.
The MML pre-receivership accounting noted that although the company appeared to be balance sheet-solvent, with shareholder equity of US$6.2 million, most of the liabilities were due, with the bondholder having demanded full repayment of its investment.
Mystic Mountain was opened in 2008 with financing from the state-run Development Bank of Jamaica and private investors, including RFA, former MML chairman and CEO Michael Drakulich, businessman John Dalton, and businessman and former politician Horace Clarke, who died in 2010.
There have been several court battles fought over the business’ ownership, directorship and management.