Province finally has buyer for Liscombe Lodge

By Alec Bruce, Local Journalism Initiative reporter    
July 8 2020

LISCOMB – After years of combing the world for a suitable buyer, the Nova Scotia government expects to sell its iconic Eastern Shore resort property, Liscombe Lodge, to Hearthstone Hospitality of Dartmouth as early as this month.

The deal, which began to take shape only about five weeks ago, specifically ensures the continuity of the resort’s accommodations, facilities and approximately 60 employees, and provides the province with the right of first refusal in the event of a future sale, Nova Scotia Minister of Business Geoff MacLellan confirmed in an interview with The Journal.

“This asset will be acquired for exactly the reason that it was built, as a tourism accommodations entity,” he said about the agreement in principle, the financial terms of which remain confidential until it officially closes.

“Part of this (includes) protections of the current employee base to ensure they have opportunities to return to their occupations at the same wages. (Also), there’s no legal opportunity for something like flipping (the property) to take place. This is entrenched in the agreement.”

What’s more, he added, the buyer “has been entirely on the same page as government” on these matters. “There’s just no interest in seeing the Lodge operate in any other capacity, (and) the team at Hearthstone has been very clear that they value the employees. There’s been zero hesitation from them.”

Mike Melanchuck, whom the Nova Scotia Registry of Joint Stock Companies identifies as “Partner” of Hearthstone, was not available for comment. His LinkedIn profile states, however, that he was the company’s “VP Operations” between January 2011 and May of this year. In June, it says, he became Executive Director “Full-time” of the Nova Scotia Lifesaving Society, having served as its “Director, Past President” over the past 12 years. It also says he has “served as a consultant for not-for-profit organizations for HR and governance policy development” and that he possesses “cross-industry experience in hospitality, retail, wholesale, QSR, and property management.”

All of which would be useful in running a 60-year-old resort now marking the end of one era and the beginning of another. With 68 guestrooms – including chalets and cottages – meeting space for as many as 100 people, two restaurants, hiking trails and river tours, Liscombe Lodge is an important tourism anchor, providing crucial layover amenities to travelers visiting destinations along Highway 7 between Sheet Harbour and Historic Sherbrooke Village.

But the facility has also been costly for the provincial government to own and manage, sapping the public purse of roughly $500,000 a year in annual operating expenses and millions more over the years for periodic upgrades. “This sort of bureaucratic, tax-dollar situation just doesn’t allow it to flourish,” MacLellan said. “We’re excited about Liscombe being operated by businesspeople who are actual experts in the field and not government.”

In fact, the Lodge has been up for sale since at least 2015, when it drew a bid of precisely $1, “as long as the Province provided an additional 90,000 acres of woodland,” according to a CBC investigation at the time. A year later, another effort failed when negotiations with a different proponent broke down.

In March 2019, the Halifax office of international broker Avison Young was appointed to run a global search for what Jennifer Angel, President and CEO of Develop NS – the government agency specifically responsible for Liscombe Lodge – then called 

“a qualified buyer (to provide) good value for the province, the taxpayers and the community… in a growing tourism sector.”

Although Develop NS spokesperson Kelly Rose declined to comment on the pending sale – indicating that the minister has already provided “all of the details we can share at this time” – MacLellan himself stated that the agency’s role is effectively over. “Develop NS have fulfilled their mandate to line-up a potential buyer so we could get into the negotiations,” he said. “It’s fair to say they did all the heavy lifting.”

It’s also fair to say that the emergence of a local bidder in June may have tipped the scales in favour of the forthcoming agreement. “Part of the issue over the past several years, during which there have been quite a few suitors for Liscombe, was trying to find somebody who would continue the property in a way that would support the area’s tourism industry and the jobs that are already here,” said Guysborough-Tracadie-Eastern Shore MLA Lloyd Hines.

“That would have to be somebody who actually understands and appreciates the local realities that make Liscombe Lodge such a terrific ambassador for St. Mary’s District and extremely important to Sherbrooke Village. The current general manager, Karen Weanus, has done really great work over the years. Now, I think we’ve found the right operator.”

Neil Black, Sherbrooke resident and a director of the Historic Sherbrooke Village Development Society, agreed. “This is just the type of company we need on the Eastern Shore,” he said in an email. “It’s good for the staff and it’s good for the client. This is most positive at a time of real concern and another demonstration of the great area where we live and work on the Eastern Shore.”

St. Mary’s has had its fair share of good news lately. The California-based Whale Sanctuary Project has confirmed its intention to push ahead with plans to build the world’s second-only beluga refuge in Port Hilford, which could inject millions of dollars into the area over the next several years. Meanwhile, the provincial government recently announced a $1 million grant for much-needed infrastructure, building repairs and cultural tourism initiatives at Historic Sherbrooke Village, which is scheduled to reopen to the public later this week after four months under government-mandated lockdown during the COVID-19 emergency.

Liscombe’s pending sale completes the provincial government’s multi-year effort to divest itself of major hospitality assets. In 2019, it sold Digby Pines Golf Resort and Spa to a Halifax-based consortium for $1 million. It also extended roughly that amount in credit for renovations and covered about half-a-million in closing costs.

MacLellan refused to discuss the financial component of the tentative agreement with Hearthstone, but acknowledged it is “the same sort of template as Digby, though the details would be different,” adding that, barring unforeseen obstacles, the due diligence phase should be completed within the next few days.

“This isn’t a rubber stamp; we’ve had agreements in which the due diligence has uncovered unexpected problems,” he said. “But I get the sense that things are going smoothly. I’m confident we’ll have this wrapped up at the end of the month.”