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Asset Liquidation Investments and Investments
 3 Months Ended
Mar. 31, 2014
Asset Liquidation Investments and Investments [Text Block]

Note 6 – Asset Liquidation Investments and Other Investments

Summarized financial information – Equity accounted asset liquidation investments

The table below details the summarized results of operations attributable to HGI from the Joint Ventures in which it was invested:

    Three months  
    ended  
    March 31,  
    2014     2013  
             
Gross revenues $ 10   $ 2,113  
             
Gross profit (loss) $ (30 ) $ 773  
             
Income (loss) from continuing operations $ (30 ) $ 802  
             
Net income (loss) $ (30 ) $ 802  

Other investments

The Company’s other investments as of March 31, 2014 and December 31, 2013 consisted of the following:

    March 31 ,     December 31,  
    2014     2013  
             
Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC $ 20 $     19  
Polaroid   1,727     1,750  
             
Total investments $ 1,747 $     1,769  

The Company accounts for its investments under the equity method.

Knight’s Bridge Capital Partners Internet Fund No. 1 GP LLC (“Knight’s Bridge GP”)

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 former 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 March 31, 2014 the Company’s net investment was $20. Based on the Company’s analysis of Knight’s Bridge GP’s financial statements and projections as at March 31, 2014, 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 (“Polaroid”), 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”) to pool their individual investments in Polaroid. The pooled investments totaled 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 KPL’s General Partner. The Management LP is a wholly-owned subsidiary of Counsel.

The Company’s investment in KPL 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 March 31, 2014 and December 31, 2013 are detailed below:

  As at March 31, 2014    
                           
      Capital     Equity in     Capital     Net  
Unit type     invested     earnings     returned     investment  
Class A   $ 2,492   $ 219   $ (1,335 ) $ 1,376  
Class D     628     50     (327 )   351  
Total   $ 3,120   $ 269   $ (1,662 ) $ 1,727  

  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