Miniso Canada, the Canadian-based retailer of Miniso, a global retail brand ("Miniso Global"), obtained protection under the CCAA on July 11. Launched in 2017, the Canadian company has grown to 67 stores across the country, operating under a license agreement with Miniso Global. A dispute arose in the fall of 2018 over the quantum of debt owed to Miniso Global which led to Miniso Global demanding repayment and filing a bankruptcy application against its Canadian partner. A forbearance agreement was ultimately reached in January 2019 between the parties that required Miniso Canada to, among other things, enter into good faith negotiations for the sale of the Canadian operations to Miniso Global. A transaction never transpired, and when the forbearance agreement expired on June 25, repayment was again demanded. Rather than appointing a receiver, Miniso Global elected to make an application for CCAA protection for the Canadian company so as to maintain enterprise value. Alvarez & Marsal was appointed monitor and has been given enhanced powers to manage the Canadian operations during the proceedings while a restructuring transaction is pursued. Counsel is Fasken for Miniso Global, McMillan for Miniso Canada and Dentons for the monitor.
ILTA Grain, a Surrey, British Columbia-based grain producer, filed for protection under the CCAA on July 7, listing $149.5MM in liabilities. Founded in 2011, the company has become one of the two largest processors of quality grains in Canada, operating from six state-of-the-art facilities in Saskatchewan. As part of its growth strategy, the company has made significant efforts to export its products internationally. Over the past few years, however, the company has faced increasingly challenging international trade conditions as countries such as India, China and Saudi Arabia have decided to limit, and in some cases, entirely discontinue their Canadian imports. The reduction in international sales, coupled with a highly leveraged balance sheet, has left the company without the working capital necessary to fund operations and service its debt. While under creditor protection the company will explore its strategic alternatives, including conducting a sale and investment solicitation process. PwC was appointed monitor. Stikeman Elliott is counsel for the company.
North American Lithium, an Abitibi, Quebec-based minerals mining company, obtained protection under the CCAA on May 28, owing its creditors approximately $210.0MM, including $99.0MM to Investissement Québec (IQ). Until recently, the company operated a mine producing spodumene, the mineral from which lithium, a chemical widely used to produce batteries, is extracted. The lithium battery market is principally located in China. In recent months, the global price of both lithium carbonate and spodumene have plummeted by 60% as a result of increased supply, primarily from Australia, where producers have lower extraction costs and are in closer proximity to the Chinese markets. Unable to operate profitably under the new market conditions, the company halted production in February 2019. Shortly thereafter, the Minister of Energy and Natural Resources advised that it would commence enforcement proceedings against the company unless it put up a financial guarantee of approximately $23.0MM to cover the costs of a potential rehabilitation and restoration plan. While under creditor protection, the company intends to explore a recapitalization of the business. Raymond Chabot was appointed monitor. Counsel is Fasken for the company, McCarthy Tétrault for IQ, Norton Rose Fulbright for shareholder Contemporary Amperex Technology Canada and Woods for shareholder Jien International Investment.
British Confectionery Company and British Baazar Company, a St. John's, Newfoundland and Labrador-based manufacturer of specialty paper, obtained protection under the CCAA on April 29. The company, which focuses on manufacturing break-open lottery and promotional products, had previously filed an NOI on November 5. Attributing its financial difficulties to a variety of factors including product recalls, a fire at its production facility, and lower margins on new contracts, the company was able to attract an investor during the proposal proceedings. The investor's offer contained several conditions though, including the requirement that the province participate in providing financing to the company. Though the province seemed willing, it indicated that as a result of the calling of a provincial election, there would be a moratorium on such decisions until after the new government is installed. The company therefore converted its proceedings from the BIA to the CCAA to allow additional time for the province and investor to consider the transaction. Deloitte is the monitor. BoyneClarke is counsel for the company.
Strategic Oil & Gas (TSX-V: SOG), a Calgary, Alberta-based junior oil and gas company, along with its wholly owned subsidiary, Strategic Transmission, obtained protection under the CCAA on April 10. Focused primarily on oil and gas development in Northern Alberta, the company cites several key factors that have led to its current financial position, including deteriorating differentials on Canadian oil prices and political uncertainty with respect to pipeline approvals at the Federal level. In June, 2018, the company entered into a transaction to sell certain of its assets. Despite the sale closing, however, the proposed purchaser was unable to meet the Liability Management Ratio requirements of the Alberta Energy Regulator to facilitate the necessary license transfers. As a result, Strategic was forced to unwind the transaction, further weakening its financial position. With no capital available to fund further development and drilling improvements, the company will look to complete a sale and investment solicitation process while under creditor protection. KPMG was appointed monitor. Counsel is Dentons for the applicant and Torys for the monitor.
Bondfield, a Toronto, Ontario-based construction company with over $1B in current outstanding construction projects for major public-sector institutions across Ontario, obtained protection under the CCAA on April 3. Operating successfully for over 45 years, the company has run into significant financial and operational challenges in the past two years as it has taken on bigger P3 projects. Since August, 2018, the company's surety, Zurich Insurance, has funded the entirety of Bondfield's operations, including overhead, that could not otherwise be funded by ordinary course cash flow. Bondfield applied for creditor protection in early March, but Bridging Finance ("Bridging"), the company's senior lender, requested that the court adjourn the application to allow for a consensual restructuring approach to be agreed upon between Bridging, Bondfield and Zurich. Following extensive negotiations, a CCAA filing agreement was entered into. Under the agreement, Zurich will provide a DIP facility to fund overhead and Bridging will provide a DIP facility to fund certain litigation. EY was appointed monitor. Counsel is Osler for the company, Norton Rose Fulbright for the monitor, Goodmans for Bridging and BLG for Zurich.
Rothmans, Benson & Hedges, a Toronto, Ontario-based company that produces and sells tobacco products in Canada, filed for protection under the CCAA on March 22. It is the third and last of the big three Canadian tobacco companies to obtain creditor protection this month. The company has two primary business segments: it is the second largest supplier of traditional tobacco products in the Canadian market, and it sells and distributes IQOS products, smoke-free electronic tobacco devices which it purchases from Philip Morris. In addition to two class action proceedings commenced against the company in Quebec, the company is a defendant to a number of other putative class actions, individual actions and government-initiated proceedings throughout Canada. The company has been held liable for approximately $13.5B as a result of the Quebec Appellate decision. EY was appointed monitor. Counsel is McCarthy Tétrault for the company, Cassels Brock for the monitor and Gowling WLG for Philip Morris.
Imperial Tobacco, a Montreal, Quebec-based cigarette company that manufactures tobacco products for brands such as Marlboro and Pall Mall, filed for protection under the CCAA on March 12. The company leads the tobacco industry with roughly 48% market share of all legal sales in 2018. The two other major Canadian manufacturers and distributors of tobacco products are Rothmans Benson & Hedges and JTI-Macdonald, the latter of which was granted court protection under the CCAA on March 8. The company is currently facing an existential threat from litigation across Canada, including multiple class actions and government claims seeking to recover health care costs (collectively, the "Tobacco Litigation"). Earlier this month, the Quebec Court of Appeal upheld a 2015 ruling in a lower court that found the tobacco companies concealed the health risks of smoking from the public. The plaintiffs in the Tobacco Litigation are seeking hundreds of billions of dollars in damages, which significantly exceed the company's total assets. FTI Consulting was appointed monitor. Counsel is Osler for the company and Davies for the monitor.
JTI-Macdonald Corp., the third largest tobacco company in Canada, obtained protection under the CCAA on March 8. Based in Mississauga, Ontario, the company is indirectly owned by Japan Tobacco and has approximately 500 employees and 1,300 suppliers. Each year, it pays approximately $1.3B in taxes to the federal and provincial governments. The company, along with Imperial Tobacco Canada Limited and Rothmans, Benson & Hedges, are defendants in two significant class action proceedings that were tried in Quebec. In June 2015, the companies were found liable for moral damages. The defendants appealed, but learned earlier this month that their appeal had been rejected, making them liable for over $500B in estimated damages, with the judgment potentially becoming enforceable immediately. The company is also the subject of significant health care cost recovery litigation that was commenced as a result of legislation passed in various provinces related to alleged "tobacco related wrongs". Asserting that it has no liability in respect of the litigation claims, the company will attempt to appeal to the Supreme Court of Canada while under creditor protection. It will also use the proceedings as a platform to find a collective solution for the benefit of all stakeholders. Deloitte was appointed monitor. Counsel is TGF for the company and Blakes for the monitor. BlueTree Advisors was appointed CRO.
Divestco (TSX:DVT), a Calgary, Alberta-based energy geoscience services company that provides a comprehensive and integrated portfolio of data software and services to the oil and gas industry, filed for protection under the CCAA on March 4, listing approximately $20.9MM in liabilities. The company has been significantly impacted by the ongoing financial downturn affecting the oil and gas industry in Canada. This decrease in revenue, coupled with legacy administrative overheads, has placed significant stress on the company's cash flow. As a result, the company has needed to raise significant amounts of capital to fund the business losses, placing the company at a competitive disadvantage. The holders of secured loans that had been funding the company to continue its operations are no longer willing to provide further funding without a restructuring. Through these CCAA proceedings, the company expects to secure commitments for up to an aggregate amount of $1.5MM in DIP financing from certain of its directors, officers and existing shareholders. Grant Thornton was appointed monitor. Field Law is counsel to the company.