SRTX Group seeks reverse vesting transaction following NOI filing

SRTX Inc., Sheertex Inc., SRTX Software Holdings ULC and Octagon Performance Materials Inc. (collectively, the SRTX Group), Montréal-based hosiery companies behind the Sheertex brand, filed Notices of Intention to Make a Proposal on February 17, 2026 and is seeking approval of a proposed reverse vesting transaction with A.Y.K. International Inc., another Québec-based hosiery firm which owns the Secret and Silks pantyhose brands.

Founded in 2017, SRTX built its business around rip-resistant hosiery marketed under the Sheertex brand, later expanding into textile technologies including Watertex and Cortex. Between 2019 and 2025, the company raised about $255 million USD in equity and debt to fund expansion and manufacturing integration. It relocated operations to Montréal and, in 2024, opened a 300,000 square foot vertically-integrated facility in Pointe-Claire intended to internalize production of proprietary fibers.

Despite rapid growth in earlier years, the business never achieved profitability. Revenues peaked at $45.5 million USD in 2023 but declined to $27.9 million USD in 2024. Losses have also deepened. EBITDA was negative $40.7 million USD in 2023 and negative $40.0 million USD in 2024, with cumulative losses exceeding $128 million USD since 2023.

In March 2025, amid mounting liquidity pressure, SRTX completed a $37.5 million USD equity recapitalization supported by existing investors. The financing followed a bridge facility from Export Development Canada and was intended to double production capacity and stabilize operations. However, the capital injection proved insufficient. Continued operational challenges and tariff-related pressures led to a formal strategic review launched on October 29, 2025, with PwC Corporate Finance initiated a two-phase sale and investor solicitation process beginning November 3, 2025.

Of 138 to 140 parties contacted, 23 executed NDAs, eight submitted non-binding LOIs, and seven advanced to binding offers by January 15, 2026. On January 29, 2026, A.Y.K. International Inc. was selected as the successful bidder, subject to court approval.

At filing, operations were primarily financed by EDC. The EDC facility comprised three tranches: $40 million USD (Tranche A), $2.5 million USD (Tranche B, repaid), and $5 million USD (Tranche C). As of February 2026, EDC’s secured exposure totaled approximately $46.5 million USD, including accrued interest.

RBC had previously provided a $12 million USD ABL facility and issued letters of credit, including a $6.5 million CAD lease LC and a $1.0 million USD supplier LC. The revolving facility was repaid prior to filing, and remaining exposures are cash-collateralized or EDC-guaranteed.

Trade payables at filing are estimated at $4.7 million USD. All regular payroll and vacation entitlements were current, though severance remains outstanding for terminated employees.

The proposed transaction is structured as a subscription for newly issued shares of SRTX Inc., representing 100% of its post-closing equity. All existing equity interests will be cancelled. The purchaser intends to retain seven of 30 employees.

The approval hearing is scheduled for February 24.

PricewaterhouseCoopers Inc. is the proposal trustee. Counsel is Osler, Hoskin & Harcourt LLP for the companies.