Special General Assembly: With 100 votes “FOR” the Agreement with the Bank of Montreal (BMO)

institution_iconWith 100 votes in favour, 8 votes against and 5 abstentions, the members present at the HCGM Special General Assembly approved the refinancing of the Community’s debt.

In essence, the motion that was presented and approved was for a clear-cut and more advantageous agreement with BMO, whereas at last year’s postponed General Assembly, held on June 11, 2013, a motion was passed in favour of the Royal Bank of Canada (RBC) proposal or from any other financial institution offering the same or better terms.

The Special General Assembly began at 6:40pm on Tuesday, November 11, 2014, after quorum had been established.   Mr. Denis Marinos and Mr. Tassos Xypolitakis were, respectively, elected Chairman and Secretary of the Assembly.

Following the reading and approval of the previous Assembly’s minutes, the floor was given to Mr. Nick Flouris, HCGM Treasurer, to present the Assembly’s main topic.

Mr. Flouris informed the members that this refinancing offer from the BMO would allow the HCGM to acquire a loan of $4.4 million, in order to consolidate its debt, with an amortisation period of 15 years and a fixed interest rate of 4.7% for the first 5 years.  He compared this rate to the offer from the RBC which had an interest rate of 4.75%.  Furthermore, with the BMO’s offer, the HCGM would acquire a Line of Credit of $2 million with the current prime interest rate +2%., whereas the RBC’s offer was for a $1 million Line of Credit.

Another very significant element of this debt-consolidation agreement – where all existing long-term loans would be transferred into one loan – is that three of the five assets currently pledged as collateral security would be released.  Therefore, the only two properties that would be mortgaged under the new agreement are the Sherbrooke Street and the Wilderton Avenue properties.  Moreover, BMO’s offer did not include any requirement for guarantees from the Greek State, in terms of the pending issue with the Greek State loan.

During the first five years of the new loan agreement, there will be a close to $1.5 million positive impact to the HCGM’s cash flow.   Although there is a timing factor involved between last year’s RBC offer and the current one from BMO, there are also reductions in the penalties to be paid to the existing financial institutions, from $ 236,000 last year, to $137,000 with the present offer.  As well, the annual fees of the loan will amount to $7000, whereas today $10 000 is paid for the loan with Scotiabank and $7000 to the Caisse Desjardins.

Subsequent to Mr. Flouris’ presentation, the HCGM President, Mr. Nicholas Pagonis, informed the members that approval of the General Assembly is required, in order to enable both the HCGM and BMO lawyers to draft up the necessary documentation for this agreement.  Mr. Pagonis also stated that the HCGM Advisory Board has rendered a favourable opinion on the BMO offer.

The President then publicly thanked Mr. Nick Flouris and Mrs. Pelagia Adamidis, HCGM Acting Executive Director, for the excellent work they carried out.  “It is quite clear by comparing the two offers that we will be able to operate with increased comfort, because of the reduced capital amount and interest rates.  As well, in the event of additional cash flow needs, we will have a Line of Credit of up to $2 million available to us,” stated Mr. Pagonis

Because of the reservations expressed by some members on the acquisition of yet another loan, the President clarified, once again, that in essence it is a transfer of pre-existing loans into one, with more favourable terms.  “Indeed the HCGM is operating with borrowed money.  It is a disturbing fact, but we must consider what led us to this state.”

During the 1980s, the HCGM expanded its operations.  Until then, it had owned and operated 4 churches and the school on Houde Street.  During that decade, it acquired two more churches, two community centres and the rest of the school buildings that exist today.

“All this was purchased without the Community being able to finance its acquisitions.  Thus, the HCGM was obliged to turn to the banks.  The buildings were utilised from the very first day of their acquisitions,” stated Mr. Pagonis, while adding “Was this great expansion worth it?  It made us the largest organisation of its kind worldwide, with close to 300 employees, 1400 students in elementary school, over 700 students in our supplementary education schools, with 6 churches, community centres, social services and sports centers.  If I ask how many people have made a donation from those that said it was worth it, I believe not even 1% would answer positively.”

“Those of you who are present tonight – who work actively and show interest in the HCGM – are worthy of praise.  It is not of importance if we agree on some points and disagree on others.  What is important is that you are present,” concluded Mr. Pagonis.

The General Assembly adjourned shortly after 9:30pm.