An Ontario textile manufacturing executive and real estate investor is poised to acquire struggling outdoor retailer Mountain Equipment Co., after a months-long search for investment to revive the business.

MEC has reached a deal to sell a majority stake to Tim Gu, according to a source with knowledge of the deal. Mr. Gu is principal owner of real estate investment firm Smart Investment Ltd. and president of textile manufacturer E. Star International Inc., according to his LinkedIn profile.

The Globe is not naming the source because they weren’t authorized to speak about confidential matters.

When reached for comment on Monday, Mr. Gu responded that he could not comment in detail until formal approvals are in place.

“At this time, we are in the process of working through the required regulatory approvals, including the ongoing review by the Competition Bureau,” Mr. Gu said, referring to a merger review the Bureau opened on April 9, for a deal between MEC Mountain Equipment Co. Ltd. and a company called TGI Holding Inc.

“We can confirm it’s a Canadian buying group,” MEC spokesperson Jo Salamon said on Monday. She declined to provide any further details about the deal.

MEC filed for court protection from its creditors during the pandemic, and was acquired in late 2020 by California-based investment firm Kingswood Capital Management LP for $150-million. The deal ended the retailer’s 49 years as a co-operative.

The Globe and Mail reported in January that MEC was up for sale again and had fallen behind on payments to its vendors.

MEC’s business initially rebounded in 2021 following significant declines in the first year of the pandemic. But sales have been falling since 2023, according to a confidential presentation provided to potential bidders for the chain, which was obtained by The Globe. That document said the company required an infusion of capital to normalize its operations.

MEC had $89.2-million in debt and $6.4-million in cash as of late June, 2024, according to a separate “company snapshot” dated August, 2024, which was provided to prospective buyers and also obtained by The Globe.

“We are committed to supporting MEC’s long-term success and look forward to sharing more when the timing is appropriate,” Mr. Gu said.

The manufacturer Mr. Gu leads, E. Star International Inc., has factories both in Canada and overseas that produce apparel and hosiery, according to the company’s website, which lists Canada Goose, Canadian Tire and Walmart among its clients.

Mr. Gu is also chairman of the board of Mississauga, Ont.-based Unisync Group Ltd., which produces uniforms and apparel for clients in the public and private sectors, as well as first responders.

Mr. Gu “has an extensive background in the Canadian garment industry going back to 1999,” according to a 2023 Unisync press release announcing his appointment as chairman. The announcement noted his “valuable expertise in garment manufacturing, sourcing, and product development, both domestically and overseas.”

Mr. Gu has also owned a stake in Tilley since 2020, when veteran retailer Joe Mimran took over the Canadian apparel brand, according to his LinkedIn profile.

As part of the deal, MEC chief executive officer Peter Hlynsky will invest in a minority stake in the company, and Kingswood will also remain as a minority shareholder, according to the source.