Stornoway Diamond (TSX-SWY), a Montreal, Quebec-based diamond mining company that owns and operates Quebec's first and only diamond mine, obtained protection under the CCAA on September 9. Construction of the company's mine in Northern Quebec commenced in 2014, funded by a $946.0 million financing package that included equity, senior and convertible debt, equipment financing and the world's first ever diamond stream. The project was heavily supported by the Quebec government, which considered the mine an integral component of its "Plan Nord" initiative to enable development of the northern part of the province and its local communities. Commercial production commenced in 2017, but the mine's performance fell significantly short of expectations as a result of delays in the ramp-up of the mine, lower grade ore, and higher-than-anticipated levels of diamond breakage. Adding to the company's difficulties was a declining price for rough diamonds. When production commenced, the market price was US $147/carat. By the second quarter of 2019, the price was only US $76 / carat. Unable to operate profitably under its current conditions, and with no additional liquidity available, the company concluded that it had to restructure its balance sheet and launched a sale and investment solicitation process in April 2019. The process led to a proposed transaction with certain of the company's existing stakeholders, which the company will attempt to complete while under creditor protection. Deloitte was appointed monitor. Counsel is Norton Rose Fulbright for the company, Osler for the monitor, McCarthy Tétrault for Investissement Québec and Diaquem and Fasken for the Caisse.
Groupe Capitales Médias, a Quebec City, Quebec-based media company, filed an NOI on August 19, listing approximately $25.9 million in liabilities, including $8.0 million to Investissement Québec. The company was created in 2015 to purchase all the daily newspapers outside of Montreal that were at the time owned by Gesca, a Power Corporation entity. The newspapers are Le Soleil (Québec), Le Quotidien (Saguenay), Le Nouvelliste (Trois Rivières), La Tribune (Sherbrooke), La Voix de l'Est (Granby) and Le Droit (Ottawa). The sole shareholder is Martin Cauchon, a former Federal Minister of Justice. Attributing its financial difficulties to an erosion of advertising revenue to global digital players such as Facebook and Google, and to a lesser extent lower circulation, the company has been unprofitable in the past three years and has run out of cash. PwC is the proposal trustee and interim receiver and will be launching a sales process for the business in September. Counsel is Stikeman Elliott for IQ, DS Avocats for the company and McCarthy Tétrault for PwC.
Acier Orford, a Sherbrooke, Quebec-based company specializing in the manufacturing and installation of reinforcing steel and wire mesh, filed a proposal to its creditors on August 16. In March 2019, it was discovered that the company's accounts receivable included invoices for future work and extras on projects that had not yet been approved. It was also discovered that the company's inventory had been overstated. In May 2019, two of the company's senior lenders, BDC (owed $1.8 million) and TD (owed $9.8 million), issued demands for repayment. In response, the company has put together a restructuring plan that will see Groupe Dallaire, a supplier and major business partner, take over the company. The restructuring will see the company's secured lenders take a discount on their loans, and a basket payment of $200.0 thousand is being offered to the company's remaining unsecured creditors. PwC is the proposal trustee. Counsel is Serge Dubois for the company, McCarthy Tétrault for the proposal trustee, Fasken for TD, BLG for BDC and Langlois Avocats for Groupe Daillaire.
Le tour des champions de Montréal, a Montreal, Quebec-based company that was organizing an equestrian show jumping event planned for September 2019 in Montreal, Quebec, filed for bankruptcy on July 30, listing $1.6MM in liabilities, including $785.0M to Dutch-based Global Champions Tour B.V. Founded in 2005, the Longines Global Champions Tour is an annual show jumping series that brings together the top show jumpers in the world to compete in prestigious locations such as Paris, Monaco, Shanghai and Rome. Montreal was slated to be a destination for the first time in 2019, but event organizers announced on July 23 that they were cancelling the event, claiming that they could not meet on a timely basis the winning conditions to ensure the success of the event. PwC is the bankruptcy trustee.
Plasticon Canada, a Montreal, Quebec-based manufacturer of fiberglass reinforced plastic products such as storage tanks and piping systems, filed for bankruptcy on July 29, listing $5.4MM in liabilities, including $2.0MM to HSBC.The company's recent financial difficulties are largely a result of a sizeable but ultimately unprofitable contract that the company entered into in 2018. The company was receiving financial support from its parent company in Europe, but due to continued losses and weak order intake over the last months it became impossible for the parent company to continue supporting its Canadian subsidiary. EY was appointed bankruptcy trustee.
Argex Titanium (TSX:RSX), a Laval, Quebec-based company that is developing an innovative and environmentally sustainable technology for producing high-grade titanium dioxide pigment, filed an NOI on June 18, listing approximately $4.7MM in liabilities. Still in the research and development stage, the company has been unable to raise the capital necessary to complete construction of a production plant. PwC was appointed proposal trustee and will be conducting a stalking horse sales process for the company's assets. 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.
OSSimTech, a Montreal, Quebec-based technology company that designs, manufactures and sells virtual reality open surgery simulators, filed an NOI on May 27, listing approximately $3.8MM in liabilities, including $2.2MM to Investissement Quebec and $466.8M to CAE Capital. Deloitte was appointed proposal trustee. Davies is counsel to the company.
Mometal Structures, a Varennes, Quebec-based manufacturer and installer of non-conventional steel structures, was placed in receivership on May 8 on application by HSBC, owed approximately $7.8MM. In early April 2019, the company was placed in HSBC's loan management unit after a 13-week cash flow forecast indicated a $5.6MM deterioration in the company's margin position over a 10-week period. A revised forecast was provided by the company in April that showed no deterioration in the bank's position. This forecast, however, was predicated on the receipt of $11.0MM from EllisDon, the company's largest customer, as advances on future projects. By the end of April, these receipts did not materialize and the company did not have sufficient liquidity to continue operations. Deloitte was appointed receiver. Fasken is counsel for the applicant.
Groupe Paquette Mécanique du Bâtiment Inc., a Laval, Quebec-based mechanical contractor, had its assets placed in receivership on May 6 on separate applications by Caisse Desjardins, owed approximately $7.0MM and Fiera, owed approximately $3.2MM. MNP was appointed receiver over the company's equipment, tools and rolling stock and BLT Lapointe was appointed receiver over the remaining assets. Counsel is Dentons for Fiera, Gowlings WLG for Caisse Desjardins and Miller Thomson for the company.