The CEO of Growth Works Capital Ltd. says his company may soon make another pitch for Crocus Investment Fund, despite having two offers for the beleaguered fund turned down by its receiver.

David Levi, president and CEO of the Vancouver-based labour-sponsored fund, says even though his overtures were rejected by Russ Holmes, the Deloitte & Touche LLP partner handling the Crocus receivership, he may make another offer, possibly in the coming month.

GrowthWorks first offered $70 million for the shares of 46 Manitoba-based companies remaining in the Crocus portfolio. The second offer was to pay whatever price an independent valuator deemed the fund to be worth.

“Essentially, we put offers in and they were rejected with no discussions between ourselves and the receiver. Holmes refused to entertain the offers,” Levi says.

Holmes says the GrowthWorks offer did not give enough value to Crocus unitholders: “If you check the reports and do the math, the value placed on the portfolio as of June 28, 2005, was in the $60 million-$65 million range. Plus there’s $23 million in cash. Then compare that to $70 million.”

As well, the rights held by Crocus’s investee companies under their original contracts with Crocus mean it’s easier to deal with them on an individual basis or in small groups, rather than selling them as a package, Holmes says.

Crocus, once a major focus of investment activity in Manitoba, was placed in receivership last June. It has suffered massive devaluations, a blistering report from Manitoba’s auditor general, allegations of activities contrary to the public interest by the Manitoba Securities Commission, an RCMP investigation into allegations of criminal activity, plus a $200-million civil suit filed last July.

Bernie Bellan, the disgruntled Crocus shareholder who’s leading the charge in the civil suit, says he has had discussions with Levi and has confirmed that his legal action won’t stand in the way of any potential sale to GrowthWorks.

Bellan says the plan is to call a shareholders’ meeting to vote on the GrowthWorks’ proposal and, assuming it receives strong support, use the results to put pressure on the receiver.

Bellan says he is not disheartened by a late January ruling that stipulated he had to drop his entire legal team because one of the lawyers used to represent James Umlah, former chief investment officer of Crocus and one of the parties named in the lawsuit.

New lawyers

The new lawyers are more tenacious than the ones they’re replacing, he says, and are in accord when it comes to naming the provincial government in the suit. Other parties named in the suit include the fund’s former officers and directors, brokers Wellington West Capital Markets Inc. and BMO Nesbitt Burns Inc. , auditor PricewaterhouseCoopers and the MSC.

Holmes is still waiting for a court ruling to approve his recommendation that Crocus pay out $14.2 million to the fund’s 33,662 shareholders. It would be the first time investors have received any return on their units since Crocus shares were frozen in December 2004.

The receiver has $20 million in short-term investments, the majority of which is not needed to finance ongoing operations as it winds down the fund.

Levi says GrowthWorks would like to operate in Manitoba: “We’re in Saskatchewan and Ontario, so Manitoba is a pretty obvious place for us to do business. We can do much better for the shareholders if we managed the existing portfolio for growth and continued to invest in the companies we think have a chance to grow.”

GrowthWorks has made an application to the MSC to be a licensed manager in the province and is in discussions with the province to sell shares to the public. “Whether we get Crocus or not, we are committed to setting up operations in Manitoba,” Levi says.

He is considering offering Manitoba investors the company’s Canadian Fund, which is already sold in Saskatchewan and Ontario, or even creating a new fund. IE