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Asset Liquidation Investments and Investments
 12 Months Ended
Dec. 31, 2013
Asset Liquidation Investments and Investments [Text Block]

Note 5 –Asset Liquidation Investments and Investments

The table below details the summarized results of operations, for the years ended December 31, 2013 and 2012, attributable to HGI from the Joint Ventures in which it was invested during those years.

    2013     2012  
             
Gross revenues $ 7,589   $ 8,666  
             
Gross profit $ 1,200   $ 2,099  
             
Income from continuing operations $ 1,200   $ 2,023  
             
Net income $ 1,200   $ 2,023  

The table below details the summarized components of assets and liabilities, as at December 31, 2013 and 2012, attributable to HGI from the Joint Ventures in which it was invested at those dates.

    2013     2012  
             
Current assets $ 1,415   $ 3,733  
             
Noncurrent assets $ 87   $ 222  
             
Current liabilities $ 122   $ 337  
             
Noncurrent liabilities $   —   $   —  

The Company’s other investments as at December 31, 2013 and 2012 consisted of the following:

    2013     2012  
             
Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC $ 19   $ 20  
Polaroid   1,750     2,406  
             
Total investments $ 1,769   $ 2,426  

Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC

In December 2007 the Company acquired a one-third interest in Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC (“Knight’s Bridge GP”), a private company, for a purchase price of $20. The additional two-thirds interest in Knight’s Bridge GP was acquired by parties affiliated with Counsel Corporation, the Company's majority shareholder (together with its subsidiaries, “Counsel”). Knight’s Bridge GP is the general partner of Knight’s Bridge Capital Partners Internet Fund No. 1 LP (the “Fund”). The Fund holds investments in several non-public Internet-based e-commerce businesses. Since the Company’s initial investment, the Company’s share of earnings has been exactly offset by cash distributions, and at December 31, 2013 the Company’s net investment was $19. Based on the Company’s analysis of Knight’s Bridge GP’s financial statements and projections as at December 31, 2013, the Company concluded that there has been no impairment in the fair value of its investment, and that its book value is the best estimate of its fair value.

Polaroid

In the second quarter of 2009, the Company indirectly acquired an approximate 5% interest in Polaroid Corporation, pursuant to a Chapter 11 reorganization in a U.S. bankruptcy court. The investment was made as part of a joint venture investor group (the “JV Group”) that includes both related and non-related parties. The JV Group formed two operating companies (collectively, “Polaroid”) to hold the acquired Polaroid assets. The Company, the related parties and two of the unrelated parties formed KPL, LLC (“KPL” or the “LLC”) to pool their individual investments in Polaroid. The pooled investments totalled approximately $19,000 of the aggregate purchase price of approximately $55,000. KPL is managed by a related party, Knight’s Bridge Capital Partners Management, L.P. (the “Management LP”), which acts as the General Partner of the LLC. The Management LP is a wholly-owned subsidiary of Counsel.

The Company’s investment in the LLC has two components:

  • HGI acquired Counsel’s rights and obligations as an indirect limited partner (but not Counsel’s limited partnership interest) in Knight’s Bridge Capital Partners Fund I, L.P. (“Knight’s Bridge Fund”), a related party, with respect to its investment in Class A units. The investment is held by Knight’s Bridge Fund in the name of a Canadian limited partnership (the “LP”) comprised of Counsel ( 95.24%) and several parties related to Counsel. HGI is also responsible for Counsel’s share of the management fees, which are approximately $40 per year. The economic interest entitles HGI to an 8% per annum preferred return. Any profits generated in addition to the preferred return, subsequent to the return of invested capital, are subject to the Management LP’s 20% carried interest.

  • HGI directly acquired Class D units. These units are subject to a 2% annual management fee, payable to the General Partner, of approximately $11 per year. The units have a 10% per annum preferred return. Any profits generated in addition to the preferred return, subsequent to the return of invested capital, are subject to the Management LP’s 20% carried interest.

The components of the Company’s investment in Polaroid at December 31, 2013 and 2012 are detailed below:

As at December 31, 2013

      Capital     Equity in     Capital     Net  
Unit type     invested     earnings     returned     investment  
Class A   $ 2,492   $ 209   $ (1,300 ) $ 1,401  
Class D     617     50     (318 )   349  
Total   $ 3,109   $ 259   $ (1,618 ) $ 1,750  

As at December 31, 2012

      Capital     Equity in     Capital     Net  
Unit type     invested     earnings     returned     investment  
Class A   $ 2,447   $ 137   $ (654 ) $ 1,930  
Class D     606     30     (160 )   476  
Total   $ 3,053   $ 167   $ (814 ) $ 2,406