Eugene Melnyk’s last tenure as a CEO ended terribly. Biovail
settled for $10-million because they “repeatedly overstated earnings and hid losses in order to deceive investors”. Melnyk himself
had to pay a $565,000 fine and was banned from executive roles in publicly-traded Canadian companies for five years.
He quitas CEO in 2004 and chariman in 2009 when Biovail stocks never recovered as he’d expected. I hadn’t thought about this before, but repeated misleading of investors kind of puts into question all of Melnyk’s public accounting to the Sens’ finances.
Eugene Melnyk has liquidated nearly every non-Sens asset he owns. He
sold his racing and breeding stock (of horses) back in 2014 after being in the business since 2001 (though he has
bought his way back into breeding horses to sell). His $1.5-billion in Biovail shares dropped in value to $600-million under his watch, but
he refused to sell them until a hostile takeover and renaming as Valeant Pharmaceuticals — he sold them at $20 per share, less than one-fifth of what they were back up to by early 2013. His only
ongoing ventures seem to be two small pharmaceutical startups, but even those he’s quietly sold shares in to help finance himself. His activities seem to be those of a person who is bleeding money and desperately trying to stay afloat.
Melnyk’s financial situation appears dire. Despite his estimated $1.5-billion net worth when he bought the Sens, Melnyk still decided to do nearly half the
purchase in debt. He has had to
routinely refinance and restructure his debt. He’s had to
keep getting extensions on his debt repayment. He reportedly
got very upset at Scotiabank over how they were handling his debt, tore up their arena naming agreement (selling the rights to Canadian Tire), and tried to remove their presence completely from the arena before Bettman forced him to not alienate the exclusive Canadian bank sponsor of the NHL. Travis Yost
has commented that the interest rates on Melnyk’s most recent loans are “bordering on predatory”. And let’s not forget that the last time Yost reported on Melnyk’s lack of finances, all of his articles were
erased due to hacking by a mysterious Ukrainian IP address. He seems to be out of cash, and is financing the Sens with increasingly impossible loans.
