Lightning co-owner set to give up charge

Those close to Len Barrie say he is likely to throw in the towel on his one-year run as co-owner of the NHL's Tampa Bay Lightning next Saturday, clearing the way for (sparring) partner Oren Koules to take over.

Under the agreement worked out by NHL commissioner Gary Bettman when it became apparent Barrie and Koules could no longer co-exist, Barrie was given until the end of September to put together a deal to buy out Koules. If he failed, then Koules would get a chance to buy out Barrie.

Neither Barrie nor Koules is talking, as Bettman issued one of his infamous gag orders. But a person with knowledge of how the buyout agreement was set up confirmed the reason Barrie was allowed to go first is because no one thinks he can pull it off.

If he can't, then Bettman can say: "Len, you had your chance and now we'll turn things over to Oren." If Koules went first and was successful, Barrie could have claimed he was not given a fair chance.

Soon all that will be left is the question of how a league that supposedly put in new, tough due-diligence procedures with the arrival of the Lightning co-owners last year did not see anything wrong with someone whose net worth was tied up in a real estate gamble.

It looks as if Barrie has to drop out before his September deadline because he is fighting to save that gamble - a massive development near Victoria called Bear Mountain.

Like many real estate developers, Barrie and his 17 investors - who include current and former NHL players such as Mike Vernon, Gary Roberts, Joe Nieuwendyk, Ray Whitney, Rob Blake, Ryan Smyth, Sean Burke, Rob Niedermayer, Scott Mellanby, Matt Pettinger and Trevor Kidd - were whipsawed by falling prices and the drying up of bank credit.

Some of those investors are angry and some are not, but they all have two things in common: They are not talking about it and all fervently hope Barrie can pull a rabbit out of his hat. He needs to work out a new financing deal on the 500-hectare development that includes two golf courses, a resort, hotel and as many as 5,000 condominiums, townhouses and residential lots.

No doubt some were concerned when Vernon, who is one of the largest investors, sold his custom-built Calgary house this week for a city-record $10.3-million. Vernon would not comment on the sale, but one of his friends said it had nothing to do with any problems with Bear Mountain.

The B.C. project was going well until last October, when the worst of the recession hit. Suddenly, housing sales dried up and the value of the project dropped. Even worse, Barrie's bankers got nervous about the big loans that came up for renewal this year.

Barrie did announce recently that he closed a deal worth $350-million with Siraj Capital Ltd., an investment company based in Dubai. The deal involves a sukuk, which is a hybrid of a conventional bond and a share commonly used by Islamic investors because their religion forbids interest payments.

Under this arrangement, Siraj Capital gets control of the residential side of the Bear Mountain project for what amounts to a $350-million loan with stiff terms. Once Barrie has the homes sold (about 1,200 have been sold so far), Siraj Capital will get its money back plus the Islamic version of interest, plus a 25-per-cent equity stake in the development.

But even this depends on Siraj being able to raise the $350-million by selling units in a weak market. If the units cannot be sold by the first week of October, the deal will likely die.

The reason all of the Bear Mountain investors are keeping quiet, even the unhappy ones, is that none of them want any negative vibrations to kill the Siraj Capital deal. They see it as the only hope of getting their money back, let alone making a profit.

If successful, it may also go a long way to soothing Barrie's major lender, HSBC. Apparently the bank wants to be repaid a lot quicker than Barrie thinks is manageable (say two years versus five or more) and it wants higher fees than Barrie is willing to pay.

But not everything is gloomy. Once Bear Mountain dropped its prices by 20 per cent or so, the condos started selling again. Since the spring, 200 units were sold, although they have a long way to go. Construction prices have dipped too, which makes selling homes easier.

Barrie has his friends and his detractors but most agree he has the gift of the gab. Everyone hopes it will be enough to save his money.