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.
Ascent Industries (CSE:ASNT), which is in the business of cultivating, producing, processing, developing and distributing cannabis and cannabis-based products in British Columbia and Nevada, US, filed for protection under the CCAA on March 1, owing approximately $7.0MM to Gulf Bridge, a Cayman Islands-based company. Since cannabis is a regulated product, the company's ability to generate revenue is largely dependent on its holding the necessary licences. In September 2018, Health Canada partially suspended the company's cannabis licences, which are held by its subsidiary Agrima Botanicals, as a result of Agrima's failure to meet certain compliance requirements. In November 2018, Health Canada further notified Agrima of its intention to revoke its licences for alleged contraventions of the Cannabis Act. Due to Health Canada's suspension and proposed revocation of the company's cannabis licences, the company is no longer able to legally produce or distribute cannabis in Canada. This has decimated the company's ability to generate positive cash flow, and is the primary cause of its financial difficulties and corresponding insolvency. In addition, the suspension and proposed revocation of the licences has made it virtually impossible for the company to raise money through the capital markets to resolve its liquidity problems. The company engaged Clarus Securities to assist it in conducting a sale and investment solicitation process for its business. Although the company was ultimately unable to conclude a sale transaction, a number of potential purchasers remain interested. EY was appointed monitor. Counsel is BLG for the company and Fasken for Gulf Bridge.
Elcano Group, a Calgary, Alberta-based independent oil and gas exploration, development, and production company, filed for protection under the CCAA on February 26, listing approximately $9.3MM in liabilities, including $6.3MM to National Bank of Canada ("NBC") under its primary credit facility. Several key factors have resulted in the company having constrained working capital, including the recent volatility of West Texas Intermediate (WTI) oil prices, the effect of mandated hedging programs, the softening of the Canadian dollar, the deteriorating differential price for Canadian-produced crude oil, and temporary operational challenges. Finally, the company has limited access to necessary cash flow for reinvestment due to its significant monthly payments to NBC. Since November 2018, the company has been assisted by Meta Capital Advisors to conduct a marketing process to seek investments in the company. Thus far, it has received a number of letters of intent which offer consideration sufficient to repay NBC in full, pay all of the company's liabilities, as well as provide value to the group's shareholders. The company currently requires a stay of proceedings in order to, amongst other things, provide the company with enough time to run a comprehensive and transparent sale and investment solicitation process. The company has retained the services of GMP FirstEnergy, a leading independent global energy investment bank, to assist in this sale and investment process. Hardie & Kelly was appointed monitor. Counsel is Bennett Jones for the company and BLG for the monitor.
Stantive Technologies Group, a Kingston, Ontario-based enterprise software provider focused on the development and deployment of its proprietary content management platform, OrchestraCMS, filed for protection under the CCAA on February 25. The company previously filed an NOI on November 14, listing $19.1MM in liabilities. EY was appointed monitor. TGF is counsel to the company.