Cleaning has begun at Groupe Sélection, which will see its network of 48 seniors’ residences (RPA) significantly reduce in size in the coming months, we learn in the most recent management report prepared by the controller responsible for the financial recovery of the company.
Under the protection of Companies Creditors Arrangement Act (LACC) since last November, the RPA and construction giant is currently led by controller Christian Bourque, of PwC. Its most recent report was filed Tuesday, on the eve of a hearing before the Superior Court of Quebec to take stock of the restructuring.
A long-time partner of Selection, Revera, which indirectly belongs to the investment board of the pension fund of federal civil servants PSP, intends to buy out Selection’s stakes in 25 RPAs. Ditto for Blackstone, which is in partnership with Selection for 11 other complexes.
Despite this situation, Mr. Bourque is reassuring about the residents housed in the RPAs managed by Sélection.
“The activities are stable, secure and managed properly,” writes the controller, who visited five RPAs on December 13, accompanied by a representative from the Woods firm, appointed as lawyers representing the residents, as part of the financial recovery process.
For properties affected by changes, Selection holds either 5% or 25% of the equity. Only one residence, in Repentigny, is 50% owned by Sélection. The report does not specify what will happen to the management of the residences if the buyout of Selection’s stakes by its partners materializes.
Other transactions soon to be concluded
The Fonds de solidarité FTQ will buy two buildings in Lachenaie in which Sélection has a 50% interest. The value of the buildings is estimated at 98 million. Sélection also sold its 50% stake in District Union Liva, currently under construction and 32% completed.
Another transaction is under negotiation. It concerns three buildings located in Trois-Rivières, Sherbrooke and Quebec. That of Quebec is practically finished. Selection owns 50% of the three buildings.
In addition, the huge Espace Montmorency complex, near the metro station of the same name in Laval, is facing challenges, we realize on reading the controller’s report.
It is a multi-use complex worth 450 million including a hotel, offices, shops, residential towers and underground parking. Its partners are the Fonds FTQ, Montoni, Montez and Sélection, at a quarter each. In the hotel part, Montoni holds 30%, the FTQ, 25%, Sélection, 30% and Urgo, the future hotel operator, 15%. The general contractor is a consortium formed by Montoni and Sélection.
In the PwC report, we learn that the complex’s 700 rental apartments are only 50% occupied, while construction is 97% complete.
As for the offices, which are 90% finished, 55% of the space is rented. Cégep Montmorency will be the main tenant. The other tenants announced are DHC Avocats, Scotiabank, accountants Deloitte and Montoni. On the other hand, Groupe Sélection, which was to take up residence there, will not move there in the end.
Construction of the 188-room hotel has been on hold since the summer. The end of the work is currently scheduled for May 2023. The cause of the shutdown is not known.
Discord seems to reign between the partners since the controller takes the trouble to indicate that the parties “reserve their rights with respect to claims for damages”. In time and place, these will be decided by an arbitrator, specifies Mr. Bourque.
Discussions are underway so that the Fonds FTQ, which previously advanced 21 million plus interest to Sélection to finance its capital contribution in Espace Montmorency, buys Sélection’s stakes in the Laval project.
The ax has also fallen at Selection since Mr. Bourque is in charge. There were layoffs, but they were not quantified in the report. Selection specified that it was about forty people on the construction side. This reduced expenses by $338,000.
In addition, we no longer do business with freelancers and consultants since the slimming diet is not over. Taking into account the suspension of calls for funds and the stoppage of certain construction sites, expenditure should have fallen by around 14 million at the end of February.
Selection rivals want to take advantage of the setbacks
Competitors of Groupe Sélection are trying to take advantage of the company’s setbacks to convince residents of seniors’ residences (RPA) to pack up. The Press read a letter from Résidence Lux Gouverneur which ended up in the mailboxes of residences in the Sélection Retraite Rosemont complex. “As you know, Groupe Sélection is in financial difficulty, which will unfortunately lead to even more turnover of employees at Sélection Retraite,” writes Kathy Savard, President of Lux Gouverneur. Stability is necessary to ensure the tranquility and well-being of retirees. The letter praises the merits of the complex located on Sherbrooke Street East and encourages Sélection residents to make an appointment for a visit. A reader who forwarded the message to The Press was surprised by this practice by Lux, emphasizing that there were no “negative effects of the crisis affecting Sélection” felt at Sélection Retraite Rosemont. Tuesday, M.me Savard had not called back The Press. This is “misleading advertising”, replies Selection, in a letter sent to its residents to correct the situation. The words of Lux Gouverneur contain “several erroneous information”, laments the company.
- 7 million
- Amount lost monthly by Sélection before it protects itself from its creditors