Attractions owner Dolphin Cove Jamaica appears to be in line to possibly buy its rival Mystic Mountain Rainforest Adventures, the tropical rainforest-themed attraction which is just up the road from the seaquarium’s flagship Ocho Rios operation, the Financial Gleaner has learned.
The fate of any possible deal, however, lies in the hands of the Supreme Court, which up to Tuesday was still adjudicating on litigation involving Mystic Mountain, the main asset of bankrupt company Mystic Mountain Limited, MML.
In the latest episode of the legal tussle, representatives of Rainforest Adventures Holdings Limited, RFA, the majority partner in MML’s parent company Karibukai Limited, have made an application as Karibukai, asking the court to stop the sale of Mystic Mountain to an unnamed purchaser that put in a successful bid to take the asset off the hands of receiver Wilfred Baghaloo.
Baghaloo of the accounting and tax advisory firm PricewaterhouseCoopers Jamaica is tasked with managing the affairs of MML and disposing of its assets in order to pay out Sky-High Holdings Limited, the holder of a secured bond amounting to some $1.3 billion, and thereafter paying other unsecured MML creditors. The directors of Sky-High are Adam Stewart and Ian Haynes.
Minority shareholders of Karibukai have not joined the latest court battle and are said to be in favour of the sale, in accordance with the Insolvency Act and in keeping with previous legal determinations by the court, the Financial Gleaner understands. They are believed to be unhappy that more legal fees are being racked up while the MML’s secured and unsecured creditors remain unpaid. Earlier court documents identified the Karibukai minority shareholders as Norma Clarke, the widow of former government minister Horace Clarke; businessman John Dalton; and Michael Drakulich, the former MML chairman and CEO. They are said to have a 45.3 per cent ownership stake in Karibukai, the 100 per cent owner of MML, which was formed in 2003. Horace Clarke and Drakulich were the co-founders of the attraction, which opened in 2008.
Dolphin Cove Limited is listed on the junior market of the Jamaica Stock Exchange and operates five swimming-with-the-dolphins parks, with two being in Ocho Rios and another at Puerto Seco Beach in St Ann; one in St Mary; and one in Hanover. The company is part of the Mexico-based Dolphin Discovery Group, which operates 24 similar parks in eight other countries, including Mexico, United States, Italy, Argentina, Cayman Islands, Anguilla and St Kitts-Nevis.
Contacted by the Financial Gleaner, Dolphin Cove Chairman and CEO Stafford Burrowes, citing confidentiality requirements and uncertainty surrounding the issue, said he was not in a position to comment. Baghaloo said he would provide an update when the current court matter is settled. He had disclosed earlier to the Financial Gleaner that a preferred bidder was selected after the MML assets were advertised for sale locally and overseas. Attorneys for Dolphin Cove have been observing the proceedings in court since a temporary injunction barring the sale was granted in September.
The majority owners of Karibukai are represented by Caroline Hay, QC, on behalf of law firm Ramsay and Partners; Baghaloo is represented by law firm DunnCox; Sky-High by Patterson Mair Hamilton; and recently appointed MML trustee Debbie-Ann Gordon, who is listed as second defendant in the case, is represented by Dr Christopher Malcolm. The Office of the Supervisor of Insolvency has also been an observer the matter in court. The temporary injunction staying the sale was granted on September 14 by Justice Cresencia Brown Beckford. However, the case is being heard by Justice David Batts, who presided over previous matters related to Mystic Mountain.
Baghaloo, who was appointed receiver by Sky-High in February after almost two years of court battles and insolvency proceedings, was at one time both receiver and trustee, before resigning the latter role. In court, the current trustee has made requests for several disclosures, including information related to how Sky-High came to be the sole bondholder. A request by the trustee for information related to the identity of the preferred bidder selected to purchase the MML assets was disallowed by the judge.
The eventual buyer of Mystic Mountain is expected to take over the operations of the attraction, including the lease for the premises. The owner of the land is state-owned Jamaica Bauxite Mining Limited. The leasehold arrangement is itself in dispute and was before the court prior to that legal action, which was initiated by the MML receiver, being withdrawn last month. The lease arrangement is central to the Mystic Mountain operation as the equipment, consisting mainly of various attraction rides, were custom-built for the location.
“The lease remains in place. If and when there is a sale of the assets, per the debenture agreement, then the lease will be assigned to the new owner/operator, as is customary in these situations,” Baghaloo told the Financial Gleaner earlier.
However, the future of the entire asset disposal process, including the assignment of the lease, is expected to turn on the decision by the court in the current legal challenge to the sale.