Members of Canada’s largest retail cooperative have made a long-term offer to prevent the popular outdoor utility company from being sold to an American private equity group.
Last week, the Mountain Equipment Co-op announced it was being acquired by Los Angeles-based private investment firm Kingswood Capital Management – a move that has taken many of the cooperative’s 5 million members by surprise.
As of Tuesday, the Save MEC group had collected more than 100,000 signatures for a change.org petition and raised nearly CAD 75,000 to cover legal fees.
“This is a member-owned business. And members weren’t even asked or given the opportunity to come up with alternative ideas, ”Kevin Harding, organizer of Save MEC, told the Guardian. “It’s just an affront to cooperative principles and values.”
The surprise sale follows years of increasingly poor performance for the chain of stores – last year the retailer lost $ 11.487 million on sales of $ 462 million. The effects of the pandemic only exacerbated the crisis in the company.
In public statements, the cooperative’s board of directors has worded its decision to make the most of a bad situation, saying that executives had “a stark choice: to keep the MEC brand and business under new ownership or to go into liquidation to end the MEC legacy ”.
The company has stated that by including bankruptcy protection, it does not require approval from its members as companies can sell assets with judicial approval.
“In my opinion, this MEC directors’ backroom deal will rob 5.7 million MEC members of their beloved cooperative and hundreds of millions of assets,” said Niv Froehlich, a MEC member and former MEC advisor.
“Worse, as a cooperative, MEC is proudly Canadian and part of Canada’s outdoor heritage. If an obscure US company believes it can solve MEC’s liquidity challenges and bring MEC back to profitability and financial stability relatively quickly, MEC member owners should certainly be given at least the opportunity to do the same. “
Save MEC hopes to intervene at the next court hearing on Sept. 28, Harding says the group is “cautiously optimistic” that it can make alternative proposals to a judge, including ways the company could raise funds from members. The group also plans to hold an emergency general meeting to replace MEC’s board of directors.
For Harding, the fight to save the outdoor retailer is linked to the need to maintain its founding model of the cooperative.
“A cooperative is a living alternative to the way things are: it is an indication of how things could and should be,” he said. “It’s a business, but it’s also an element of democracy. It proves that business can be done differently. “