By Alex Gyori
Since we opened the new Co-op facility, my communiqués in the newsletter have generally been about issues related to rebuilding our business, accomplishments, and challenges. Recently, a Co-op shareholder pointed out that one of the areas not sufficiently covered is a less apparent impact of our slower-than-expected sales growth: the Co-op’s current shortfall in fulfilling its commitments to shareholders who gave additional financial support to the Redevelopment Project. A relatively small number of shareholders are directly affected, yet this is an insight into the complexity of the task.
First, a little retrospective. Shareholders have been furnishing important portions of needed capital for infrastructure improvements since 1979, when they raised $10,000 for a walk-in cooler. In exchange, interest was paid on those loans as it came due every December 31. Each major expansion since then has been benefited by similar loan drives – 1988, 1992, 1997, 2009. Interest was always paid out on time. That pattern changed in 2012. Because of the substantially slower-than-anticipated growth in sales, not to mention the increase in out-of-pocket expenses as a consequence of the general contractor’s bankruptcy, the Co-op did not meet the required loan covenants with the senior lenders, People’s United Bank and Brattleboro Savings and Loan, thus prohibiting release of interest and reimbursement of subordinated maturing shareholders loans.
We immediately wrote to all shareholder lenders who were expecting the interest payment at that time to inform them and invite them to a meeting to talk about the issue. A small group attended and a frank and open discussion ensued. Concern was tempered by patient support for the Co-op in anticipation of future improvement. Our shareholder lenders understood that the loans were made to benefit the Co-op rather than as an investment opportunity, and because the loans are unsecured and subordinated to the senior lenders, some risk would be involved.
As trustees of BFC’s assets, the Co-op’s Board of Directors has been closely monitoring progress. Regular and detailed financial reporting from management engenders thoughtful, tough questions, with the expectation of positive improvement. In 2013 some gains were achieved, but December 31 came and went with the Co-op falling just short of the target. Once again, no interest was paid. Clearly dissatisfied with the sluggish pace of growth, everyone is working to accelerate the positive trends. A return to accustomed financial robustness is anticipated by the end of this calendar year.
I invite shareholders to share your thoughts on how we can do better, to bring us to where we need to be more quickly! And remember that your continued patronage is the key to our success. Thank you as always for your steadfast support.