Newsletter ArticleThe CCAA Scene: Recent and Notable - August 2010Published: 07/29/2010 Abitibi On May 4, 2010, AbitibiBowater Inc. announced that it and certain of its Canadian and US subsidiaries filed with the court in Canada a draft Plan of Reorganization and Compromise and with the court in the US a draft Debtors’ Joint Plan of Reorganization. Abitibi announced that non-disputed pre-petition secured, administrative, debtor-in-possession and other priority claims would be paid in full in cash (or satisfied as otherwise agreed), unsecured claims would receive a pro rata share of equity in a reorganized Abitibi and its current common stock would be cancelled (with common shareholders not recovering). Abitibi reported that it must secure exit financing and complete efforts regarding labour costs and pension issues and satisfy other conditions in the reorganization plans before exiting from CCAA and Chapter 11 protection. Subsequently, it was reported that Abitibi requested court permission for the creditor vote on its restructuring plan originally held on August 26, 2010 to be instead held on September 14, 2010, the delay as a result of negotiations with its unsecured creditors (in connection with its $500,000,000 rights offering) and the complexity of its cross-border restructuring. It was also reported that Abitibi repaid $166,000,000 of its DIP facility ($40,000,000 outstanding) and extended it to December 31, 2010. Abitibi produces newsprint, commercial printing papers, market pulp and wood products. AAER Inc. On April 8, 2010, AAER Inc. announced that it, AAER USA Inc. and Wind-Smart LLC successfully filed under the CCAA in Quebec. AAER’s cash in hand did not allow it to meet its current obligations and it was unable to proceed with its previously announced public offering. AAER also announced that it was granted $330,000 in interim financing to provide working capital during the CCAA process. Successive court orders have extended the CCAA stay until August 11, 2010. On July 7, 2010, AAER filed a Plan of Reorganization and Compromise which is to be submitted to creditor vote on August 9, 2010 (and, if accepted, will be approved by the court on August 11, 2010). AAER is based in Bromont, Quebec and manufactures wind turbines. Bear Mountain In March 2010, it was announced that The Bear Mountain Master Partnership successfully successfully filed under the CCAA in British Columbia. It was reported that Bear Mountain was attempting to reach an agreement with lender HSBC Bank Canada who is reportedly owed at least $200,000,000. Unlike other CCAA proceedings, media reports have described the CCAA proceeding as being driven by HSBC and other creditors, as opposed to Bear Mountain. In May 2010, it was announced that the Chief Restructuring Officer of the Bear Mountain CCAA proceeding was granted the right to assign the CCAA protected entities into bankruptcy. The CRO reported that the decision to obtain bankruptcy pre-approval was made as a result of a $3.5 million GST assessment – a GST payable would be an unsecured claim in bankruptcy as opposed to a priority secured claim under a CCAA proceeding. Subsequently, on July 5, 2010, the court extended the CCAA stay to September 30, 2010, approved the appointment of a new CEO and permitted Bear Mountain to file its Consolidated Plan of Arrangement. Bear Mountain owns the 500 hectare Bear Mountain Resort and housing development west of Victoria, British Columbia. It has been reported that Bear Mountain’s investors include former NHL players Mike Vernon and Joe Nieuwendyk as well as current NHL players Ryan Smyth and Rob Blake. Canwest Conventional and Speciality Television Broadcasting Business On May 3, 2010, Canwest Global Communications Corp. announced that Shaw Communications Inc., certain senior subordinated noteholders of Canwest Media Inc. and Goldman Sachs Capital Partners and certain of its affiliates agreed that Shaw would purchase all of the shares of the restructured Canwest (upon completion of the proposed recapitalization transaction and for approximately $478 million) and all of Goldman Sachs’ equity and voting interests in Canwest’s subsidiary CW Investments Co. (for $700 million). Approximately $440 million of the aggregate subscription price for the shares of the restructured Canwest would be used to satisfy the claims of Canwest Media’s 8% senior subordinated noteholders, US $38 million would be used to satisfy the claims of Canwest Media’s other unsecured creditors and the shares of Canwest held by its existing shareholders would be cancelled without compensation. Regarding Goldman Sachs, Canwest announced that it, Goldman Sachs and Shaw executed a mutual release with respect to the ongoing litigation between them. The transactions remain subject to the satisfaction of certain conditions as well as regulatory approval and approval from the Ontario Superior Court of Justice and on closing Shaw will own Canwest’s conventional and specialty television broadcasting assets. On July 19, 2010, Canwest announced that affected creditors approved a restated consolidated plan of compromise, arrangement and reorganization. [The plan was approved on July 28, 2010 and Canwest is proceeding with its implementation.] Newspaper and Online Digital Media Business On May 17, 2010, Canwest Global Communications Corp. announced that the Ontario Superior Court of Justice approved an approximate $1.1 billion bid (including $950 million in cash funding) to purchase substantially all of the assets of Canwest Limited Partnership and certain of its subsidiaries (the proceeds of which will provide for the full repayment of approximately $925 million owed by the sellers to its senior secured lenders). Specifically, the bid, made on April 30, 2010, was made by members of an ad hoc committee of holders of 9.25% senior subordinated notes issued by Canwest Limited Partnership and the purchased assets will include all of the sellers’ newspapers, digital and online media operations and the shares of National Post Inc. The bid is reported to provide for the continued operation of the newspapers and continued employment to all full time employees and substantially all part time employees of the sellers. As announced by Canwest, upon the completion of the bid transaction, unsecured trade creditors with proven claims of less than $1,000 would receive a cash payment for the full value of their claim and unsecured trade creditors with proven claims of $1,000 or more would receive a pro rata distribution of shares in the new company formed to purchase the sellers’ assets. Subsequently, amendments were proposed to the bid. The effective purchase price and cash funding are to remain unchanged but it was proposed that bid reflect that the ad hoc committee’s total equity commitment of $250 million will be for shares in the new Canwest company. Previously, the committee’s funding commitment of $250 million was comprised of $150 million in mezzanine notes and $100 million in shares. On June 14, 2010, Canwest announced that affected creditors approved the proposed amended plan of compromise and arrangement. On June 18, 2010, Canwest announced that the Ontario Superior Court of Justice issued a Sanction and Vesting Order approving the amended plan of compromise and arrangement. On July 13, 2010, Canwest announced that it successfully implemented its amended plan of compromise and arrangement and that its newspaper and digital media business emerged from CCAA protection under the ownership of newly incorporated Postmedia Network Inc. The CCAA stay has been extended to December 31, 2010. Smurfit-Stone On April 13, 2010, Smurfit-Stone Container Corporation announced that its Plan of Reorganization, filed in its CCAA and Chapter 11 proceedings, received overwhelming support from its voting creditors in number of claim holders who voted on the plan of reorganization and in dollar amount of claims. Stone Container Finance Company of Canada II (a special purpose financing subsidiary) was excluded by Smurfit-Stone from the plan with Smurfit-Stone reporting the exclusion would not affect the timing of the plan’s confirmation or delay Smurfit-Stone’s exit from its CCAA and Chapter 11 proceedings. On June 30, 2010, Smurfit-Stone announced that it successfully completed its restructuring and emerged from Chapter 11. Its Plan of Reorganization was confirmed by the US Bankruptcy Court on June 21, 2010 and recognized by Canadian court order. Smurfit-Stone announced that, in accordance with the Plan of Reorganization, its previous common and preferred stock was cancelled and that 2.25% of the New Smurfit-Stone Common Stock Pool will be distributed to each of its previous common and preferred stockholders. Smurfit-Stone produces containerboard and corrugated packaging. Tagish On April 12, 2010, Tagish Lake Gold Corp. announced that it successfully successfully filed under the CCAA in British Columbia. As at January 31, 2010, Tagish had total current liabilities of over $7,000,000 to its secured and unsecured trade and other creditors. Tagish is currently in default under the credit facilities provided by its largest secured creditor, YS Mining Company Inc. and who has security in all of Tagish’s property including mineral rights and mineral projects. Tagish reported that it has made investments in and expenditures on its mineral properties of over $30,000,000. It was further reported by Tagish that YS Mining has indicated a preliminary willingness to provide DIP financing as well as post-restructuring financing. Subsequent court orders extended the CCAA stay to September 7, 2010. Tagish explores and develops gold-silver mineral deposits in the Yukon Territory in Canada. Winalta Inc. On April 26, 2010, Winalta Inc. announced that it and certain of its subsidiaries successfully filed under the CCAA in Alberta. Winalta announced that on March 31, 2010 it and its subsidiaries received demands for payment and notices to enforce security from HSBC Bank Canada, its principal secured lender. Winalta and HSBC entered into a forbearance agreement whereby HSBC would be exempted from the CCAA stay but forbear from enforcing against Winalta and Winalta would be permitted to access its existing operating loan from HSBC (subject to certain margin requirements and limits). Winalta also announced that should it be in default under the forbearance agreement, HSBC would be entitled to appoint a receiver under the Bankruptcy and Insolvency Act (Canada). Subsequent court orders extended the CCAA stay to August 6, 2010. Winalta also reported that the court approved the sale of 6.13 acres of highway commercial property (for which Winalta reportedly received $1,440,000), 32 homes and lots (for which Winalta reportedly received $3,825,000) and 118 acres of residential property (for which Winalta will reportedly receive $1,600,000). Winalta is based in Acheson, Alberta and builds manufactured housing for residential and industrial use as well as traditional site-built homes. |