Microb Resources Inc. o/a Salt Spring Coffee, NOI

Microb Resources Inc. o/a Salt Spring Coffee, a British Columbia-based coffee roaster and manufacturer that distributes fair trade organic coffee throughout Canada and the US, filed an NOI on January 2, listing approximately $5.4 million in liabilities, including approximately $1.1 million to BDC.

The company’s solvency and liquidity issues began in 2021 during the COVID-19 pandemic as it struggled to adapt to increasing interest and inflation rates which made it difficult for production to keep pace with rising costs.

In November 2021, Salt Spring Coffee entered into an agreement with Club Coffee LP to outsource its roasting and packaging work. This arrangement proved unprofitable, leading to constraints in Salt Spring Coffee’s liquidity due to the higher cost of purchasing roasted beans as compared to roasting raw coffee beans inhouse. It also increased production time. Salt Spring Coffee terminated the Club Coffee agreement prior to its maturity date in October 2023 which resulted in Club Coffee commencing a claim against Salt Spring Coffee.

The company began exploring options to replace TD, its existing lender, and eventually finalized a new loan facility with RBC in June 2024. In October 2024, Salt Spring Coffee was in need of incremental liquidity and unsuccessfully attempted to negotiate an increase to the borrowing limit available on the RBC loan.

The company’s continued liquidity concerns resulted in unfulfilled sales orders with customers, and in November 2024, the company engaged KPMG to act as its financial advisor to explore various strategic alternatives. As part of that process, Maynbridge Capital provided a further loan to the company and Caffe & Roaster Holdings, an affiliated party to Maynbridge, agreed to buy certain of the company’s assets. The sale to the purchaser was approved by the court on January 16.

KPMG is the proposal trustee.

Counsel is Osler for the company, McCarthy Tétrault for the proposal trustee, BLG for Maynbridge Capital (the DIP lender), Nathanson, Schachter & Thompson for Club Coffee, Norton Rose Fulbright for BC Turf, Blakes for Intercontinental Coffee Trading and Lindsay Kenney for BDC.