Winnipeg Free Press - PRINT EDITION

Arctic's bankruptcy proceedings win award

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There are still plenty of loose ends in the bankruptcy protection proceedings of the former Arctic Glacier Income Fund, but the good news is the company is still operating, most of the jobs have been preserved and someday there will be a distribution for equity holders.

It's largely because of those positive outcomes in what was otherwise -- and still is -- a complicated process the bankruptcy protection process was named as the mid-sized company transaction of the year by the Turnaround Management Association.

Richard Morawetz of Alvarez & Marsal Canada Inc., the court-appointed monitor, as well as a half-dozen lawyers representing various of the parties involved, will be recognized at a TMA event in Washington this weekend.

Daniel Goldberg, a spokesman for Chicago-based TMA, said the 9,300-member organization gives out the awards largely based on the outcomes of the proceedings.

"Each case is unique from the other, Goldberg said. "Lots depend on the financial outcome, the number of jobs preserved and the impact on the community."

Arctic's collapse may have been the result of a series of untimely calamitous events -- starting with it being the subject of a criminal anti-trust investigation in the U.S., to which it eventually pled guilty -- but its eventual re-emergence from creditor protection was equally well-timed in a beneficial way.

Probably the most fortuitous element of that was the fact the day the company filed for creditor protection, it also received court approval for the implementation of an auction process to sell the company.

TD Securities had been retained by the company 18 months before the February 2012 court filing in an effort to come up with alternative financing.

That meant it already had all the detailed data necessary for a formal effort to sell the assets.

And just as the sale process got underway, Reddy Ice, a large U.S. packaged ice company that was just emerging from its own creditor-protection process, made public its intentions to buy Arctic.

In a recent interview in ABL Advisor, a magazine serving asset-based lending decision-makers, Morawetz said "While there was concern with respect to Reddy Ice's participation in the sales process, we felt it added competitive tension among the top bidders. In the end, that's exactly what happened as H.I.G. Capital outbid Reddy Ice. The sale transaction with H.I.G. closed in July of 2012."

The new private ownership of the company has kept things under wraps since it paid $434 million for the assets in July 2012.

The old management is out and a new CEO was appointed early this year and a number of new senior management positions have been filled.

But the bankruptcy protection proceedings are still underway and a number of significant loose ends continue to dangle, including the resolution of a $460-million indirect purchaser class-action suit.

As well, Alvarez & Marsal still has $118 million in cash to handle claims that are still being processed. It is widely understood a distribution to unitholders -- there are 350 million units outstanding -- will be forthcoming.

In an email exchange with the Free Press, Morawetz said, "We are back in court on Oct. 16 and plan to file our next monitor's report sometime later next week.

"We're just working hard right now on completing the report, which will be quite comprehensive."

The monitor has consistently maintained the timing and amount of any distributions to be paid to unsecured creditors and unitholders cannot be determined.

The units, which have traded between 18 and 25 cents since the pricing of the H.I.G. acquisition was announced in the summer of 2012, have been up and down the last couple of days in trading on the CNSX and closed at 19 cents on Thursday.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 4, 2013 B7

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