U.S. buyer wants Leap, Battery Plus

…Chahine denies allegations of wrongdoing and is seeking to sue Laurentian, claiming it acted in bad faith and failed to provide promised financing. Badr also wants the courts to remove Deloitte as interim receiver for failing to act impartially. "I will not stand idly by and lose everything I have built and see my business associates, my friends and my family victimized," Badr said in a statement released last week.

The Toronto Star
January 28, 2001

U.S. buyer wants Leap, Battery Plus
Insolvent retailer Battery Plus Inc. may soon be getting recharged.
Steven Theobald

Winner International Corp., Pennsylvania-based maker of The Club, the car anti-theft device, is putting the finishing touches on a deal to purchase the Battery Plus chain, which was forced into bankruptcy protection in November.

Sources say the deal, believed to be worth about $5 million, also involves Toronto-based investment fund company Covington Capital Corp.

Plans also include the two partners buying another Toronto company, Leap Energy and Power Corp., a maker of rechargeable batteries.

Battery Plus employees, who have been eagerly awaiting news of their fate, were told of the Leap Energy connection on Friday by Leap president Brent Meikle, who engineered the transaction.

Before then, employees relied on a letter sent by Deloitte's lawyer asking for a court date to seek approval of a sale that was in final stages of negotiations.

The strategy is to keep the 60-odd Battery Plus stores open and operating under the same banner.

Deloitte & Touche, the interim receiver in charge of day-to-day operations since mid-November, had closed 22 locations it considered unprofitable, out of 85 corporate-owned stores. There are also three locations owned by franchisees.

Battery Plus is primarily mall-based and specializes in selling consumer electronics and batteries.

The proposed deal gives Leap Energy a much-needed vehicle to distribute and market its line of rechargeable nickel-metal-hydride batteries.

Sources say other parties that put in offers for Battery Plus include InterTAN Inc., which operates RadioShack Canada and Mr. Keys Ltd., which owns the Key Man Engravables chain and is owed $1 million in secured credit by Battery Plus.

A hearing is being set for next month in Ontario Superior Court to seek approval of the sale.

Battery Plus founder Antoine Chahine Badr, who lost control of the company when Laurentian Bank of Canada called in more than $6 million in loans, is attempting to block any sale.

In court documents supporting the motion to put Battery Plus into receivership, Laurentian claimed Badr violated loan terms and redirected funds improperly to non-Laurentian accounts.

The bank also alleges that Badr failed to find a white-knight investor despite more than a year of searching.

Under Badr's control, disgruntled suppliers were only shipping goods on a cash-on-delivery basis. Laurentian cited the fact Polaroid Canada had already initiated a legal challenge for unpaid bills.

As a result, inventory levels were so depleted that the peak holiday season couldn't have saved Battery Plus, the bank concluded.

In response, Chahine denies allegations of wrongdoing and is seeking to sue Laurentian, claiming it acted in bad faith and failed to provide promised financing.

Badr also wants the courts to remove Deloitte as interim receiver for failing to act impartially.

"I will not stand idly by and lose everything I have built and see my business associates, my friends and my family victimized," Badr said in a statement released last week.

Battery Plus, founded in 1992, lost $438,205 on sales of $24 million for the 12 months ended June 30. That compares with a profit of $1.23 million on sales of $25.3 million a year earlier.

The offer from Winner and Covington doesn't include the Mississauga head office that is valued at $2.8 million but is heavily mortgaged.

Before appointing Deloitte as interim receiver, the court heard evidence suggesting Battery Plus started running out of money because of over-aggressive expansion, including a $500,000 start-up cost for its Web site.

As well, it spent $2.4 million on a new computer system.

Ontario Superior Court will try to sort through all the legal challenges and arguments in a couple of weeks.


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