Mountain Equipment Co-op says its board of directors has unanimously approved a deal in which a Los Angeles-based private investment firm will acquire MEC's assets, including the majority of its retail stores.
Vancouver-based MEC says the transition from a co-operative structure to a subsidiary of Kingswood Capital Management is needed to ensure a stable future for the business.
The retailer says it has been granted court protection under the Companies' Creditors Arrangement Act (CCAA), allowing it to continue operating e-commerce and retail stores while the transaction and other elements of the plan are completed.
Kingswood managing partner Alex Wolf says in a statement he is "honoured" to work with his new Canadian operating partners, adding his company is committed to continue to "inspire and equip" Canadians who enjoy an active outdoor lifestyle.
Long-standing MEC member and Canadian Eric Claus will lead Kingswood's newly formed Canadian affiliate as chair and CEO.
MEC chair Judi Richardson says the "difficult decision" to sell MEC follows an extensive examination of options after the company was unable to overcome years of persistent financial challenges made worse by the impact of the COVID-19 pandemic.
"Today's announcement, including the transition from a co-operative structure, is creating a positive path forward for MEC," she said.
"Kingswood's commitment to honouring the MEC ethos and the solid financial footing that this transaction will provide gives us tremendous confidence in the future."
No financial details were provided.
Alvarez & Marsal Canada Inc. has been appointed by the court as the monitor under the CCAA proceedings.
The transaction remains subject to regulatory approvals and is expected to close in the fourth quarter of 2020.
Photo courtesy of MEC.
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