Hey there, time traveller!
This article was published 23/8/2013 (1401 days ago), so information in it may no longer be current.
The final McDiarmid Lumber locations that were not sold to McMunn & Yates in June have closed over the past couple of weeks, and more details of the sad decline of a once-solid Manitoba brand have come to light.
In early June, McMunn & Yates agreed to buy six McDiarmid stores and its distribution centre. Although it was reported at the time the purchase price was $30 million, information disclosed through a court-appointed creditor protection process reveals the actual price was $11.5 million.
All those stores have been converted to McMunn & Yates Building Supplies except McDiarmid's former store in Dauphin, which was across the road from McMunn & Yates' flagship location. Dauphin-based McMunn & Yates has turned that location into a flooring store.
Earlier this month, McDiarmid's last Winnipeg store on Nairn Avenue was closed. In July, its Sioux Lookout, Ont., store was closed and the Yorkton, Sask., store is closing this weekend.
McDiarmid's restructuring officer, Richard Hutchings, said the last of McDiarmid's ready-to-move homes were about to be sold. He said that troubled division, which was beset with lawsuits and disgruntled customers, will not be taking any new orders and will be wound down.
"The reputation is just so bad," Hutchings said. "I don't feel it can carry the business on."
All that's left will be a former distribution centre in Headingley being used to warehouse the last of the unsold inventory, store fixtures and incidental equipment.
An auction for those remaining assets is to be scheduled for some time in September.
Although the CIBC's secured loan -- close to $17 million -- was paid out in full, it required another $2.8-million cash injection from McDiarmid's founder and driving force, Tom Matthews.
According to the latest report released Friday by the court-appointed monitor, PricewaterhouseCoopers, Matthews and his holding company Superior Builders Ltd. will be out about $23 million, mostly money it had injected into the company to try to keep it afloat over the past couple of years.
In addition, close to 500 unsecured creditors who were owed close to $6 million will have to walk away empty-handed.
The owner of one Manitoba stone-counter supplier owed $41,000 said, "It is a bitter pill to swallow." She said her company was doing business with McDiarmid up until early this year when the bank had already notified the company it was in default on its loan.
According to documents filed as part of the Companies Creditors' Arrangement Act filings, a structured process to find a buyer for the business had started in February.
Hutchings made it clear in affidavits filed with the court former management -- led by Matthews' son-in-law Vince Ryz -- had badly damaged the company's ability to carry on.
The asset sale and court-ordered creditor protection was preceded last fall by a nasty family feud in court where Matthews succeeded in wresting control of the company back from Ryz.
But it was clearly too late.
According to the CCAA filings, the company lost a total of $24.5 million from 2010 through the first four months of 2013, and revenues declined from $166.4 million in 2009 to $127.3 million in 2012.
Founded in 1927, McDiarmid Lumber was sold to Matthews in 1966 when it had one lumberyard and 20 employees. Ryz was hired in 1976, became general manager in 1988 and a minority shareholder a year later.
Richard Schwartz, a lawyer for McDiarmid, said the CCAA filing, which coincided with the sale to McMunn & Yates, was done to preserve as much of the business as possible -- and about 300 jobs.
"The CCAA filing is the mechanism by which the deal gets blessed," Schwartz said. "It allows time to close the deal and to provide the actual transition of the assets from the company in trouble to the new entity."
It its latest report, PricewaterhouseCoopers said it is seeking court approval to extend the stay of proceedings against McDiarmid to Dec. 7. It had been scheduled to end Aug. 30.
Seven employees have filed claims with Manitoba's Employment Standards branch totalling about $42,000.
In the report, the monitor said it is "currently reviewing related payroll records and consulting with legal counsel to determine the validity of the claims advanced."