27°c Partly cloudy
18°c Cloudy periods
Winnipeg Free Press - PRINT EDITION
Arctic Glacier fetches $434M
Jobs protected, HQ to remain in Winnipeg
THE winning bid to purchase the distressed assets of Arctic Glacier Income Fund by H.I.G. Capital was finally disclosed this week -- a jaw-dropping $434.5 million.
It's a surprisingly large sum for a company that was scuffling under onerous debt, legal uncertainties and slumping sales for the past three years that finally led it to file for bankruptcy protection in February.
"I'm speechless," one banker familiar with the company said when he heard details of the transaction.
The deal, set to close at the end of July, also seems like it will give long suffering Arctic unitholders one last kick at the can.
H.I.G.'s purchase price will mean Arctic's secured lenders and most of the unsecured lenders will be paid in full, and moreover, the company is saying there may be distributions to unitholders.
One banker, who asked that his name not be used, suggested distribution could be as high as 25 cents a unit. There are about 350 million units outstanding.
As previously disclosed, on closing, all of the employees of Arctic Glacier will be offered employment and the company's head office will remain in Winnipeg.
One longtime unitholder said the deal looks to be good for the company, employees and the city. "As for original shareholders, it's nice to see (that there may be a cash distribution), but it's small solace."
Five years ago, Arctic units were trading at $14.
Although the price of the transaction was not publicly disclosed until Thursday evening, trading in the over-the-counter market picked up in earnest on Wednesday afternoon, with the price jumping from four cents to 17 cents by the end of the day on Wednesday.
Extremely high trading volume -- more than 20 million shares traded Friday -- continued Thursday and Friday.
The deal to purchase the assets by Miami-based H.I.G., a $10-billion fund, will strip out all of the last three years of grief and misery the company was subjected to, primarily because of an antitrust investigation in the United States and exacerbated by a recession and a couple of years of unseasonably cool weather in its peak sales periods during the summer months.
At a presentation to bankers in New York Thursday, Arctic CEO Keith McMahon said the antitrust debacle ended up costing the company about $110 million, including $40 million in legal fees and settlement costs, $40 million in additional financing costs (that it would not have had to bear if the company weren't operating under a cloud of uncertainty) and another $30 million in costs related to a protracted attempt to sell the company.
"That's $110 million of debts and obligations that had nothing to do with the operation of an ice company," McMahon said.
The new buyer has discovered about $21 million in cost savings it expects to take out of the company over the next three years. They include things like more automated warehousing operations, fine-tuning distribution routes, improving financial systems and greater centralization.
One observer said, "Management has been so distracted for the past three years dealing with its legal issues that many of these operational issues were not being dealt with."
The purchase price comes to about eight times cash flow or EBITDA (earnings before interest taxes, depreciation and amortization).
At the bankers' presentation in New York -- which was held to showcase the new Arctic Glacier in an effort to raise $200 million in senior debt -- an official from H.I.G. said it paid a lower multiple than the new backers of Reddy Ice, the Dallas ice company that also just emerged from bankruptcy protection.
The H.I.G. official said it's been looking closely at Arctic Glacier for three years and believes it can be profitable.
Republished from the Winnipeg Free Press print edition July 1, 2012 B4
More Business
- Back to Top
- Return to Business
More Business
(1 of 50 articles for today)
Cape Wind gets $200M investment from Danish fund in what project president calls 'milestone'
6:35 PM 0BOSTON - The Cape Wind offshore wind project has secured a $200 million investment from a Danish pension fund in ...
Poll
Most Popular Business
- McMunn & Yates absorbs five McDiarmid locations
- Shark Club opens in citiplace
- Daycare-subsidy rules bad for business
- Magellan signs MOU to produce F-35 tails
- NY, Va. 7-Eleven stores raided as US accuses owners and managers of exploiting immigrants
- Carriers turned off by Canada's wireless law
- Local business incubator gets new name
- St. Vital Centre's energy savings help managers snag BOMA awards
- Passenger: Man who disrupted Hong Kong flight ranted about CIA, was not stable
- U.S. hedge fund increases its ownership stake in Tim Hortons to 5.5%
- Sobeys expanding reach in Western Canada with Safeway acquisition
- McMunn & Yates absorbs five McDiarmid locations
- Aircraft maintenance engineer taking off
- Shark Club opens in citiplace
- Two CBC reporters freed after being detained in Turkey
- St. Vital Centre's energy savings help managers snag BOMA awards
- Toronto condo market poses economic risk to Canada
- Daycare-subsidy rules bad for business
- New owner for lumber stores
- Fund helps entrepreneurs fly
- New owner for lumber stores
- Earls Pembina says goodbye after 18 years
- Sobeys expanding reach in Western Canada with Safeway acquisition
- Grove Pub to take over former home of Papa George's
- New rules let customers cancel phone contracts without penalty after two years
- MTS to sell Allstream to Egyptian investment group, focus on Manitoba market
- Where is easy street? Survey of city's richest routes may surprise
- McMunn & Yates absorbs five McDiarmid locations
- Custom-made suits no longer just for the ultra-wealthy
- Eateries brace for Blue blitz
- McMunn & Yates absorbs five McDiarmid locations
- Daycare-subsidy rules bad for business
- Warren Buffett -- Winnipeg-style
- Knights riding in with cash to spend
- Transcona transformation
- Target exceeds sales goal at Canadian stores
- The $2-million question
- Oil more lucrative than mining
- NY, Va. 7-Eleven stores raided as US accuses owners and managers of exploiting immigrants
- Bombardier wins German locomotive rail order potentially worth US$2 billion
- Sobeys expanding reach in Western Canada with Safeway acquisition
- McMunn & Yates absorbs five McDiarmid locations
- Toronto condo market poses economic risk to Canada
- Cutting edge, made-in-Manitoba tech finds buyer -- in Manitoba
- Google unveils Internet beaming balloons launched into stratosphere
- Warren Buffett -- Winnipeg-style
- Fund helps entrepreneurs fly
- St. Vital Centre's energy savings help managers snag BOMA awards
- Daycare-subsidy rules bad for business
- New owner for lumber stores
- New owner for lumber stores
- Snowbirds: It's that time of year again
- Sobeys expanding reach in Western Canada with Safeway acquisition
- Custom-made suits no longer just for the ultra-wealthy
- New rules let customers cancel phone contracts without penalty after two years
- Where is easy street? Survey of city's richest routes may surprise
- Value Partners cracks $1-B mark in assets
- MTS to sell Allstream to Egyptian investment group, focus on Manitoba market
- Manitoba Movers
- Grove Pub to take over former home of Papa George's
Ads by Google
You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.
You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.
Have Your Say
New to commenting? Check out our Frequently Asked Questions.
Have Your Say
Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?
Login SubscribeHave Your Say
Comments are open to Winnipeg Free Press Subscribers only. why?
SubscribeThe Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.