Winnipeg Free Press - PRINT EDITION

Rescue possible for Arctic Glacier

CEO encouraged by interest in struggling city firm

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A number of potential rescuers are considering throwing a lifeline to a Winnipeg packaged ice company that is drowning in a sea of red ink.

Arctic Glacier Income Fund is looking for someone to either buy it or inject a substantial amount of money into its operations to get it back on a firm financial footing.

A little over one month into a five-month court-supervised recapitalization process, the company president and CEO said he's encouraged by the response TD Securities, which is quarterbacking the recapitalization effort, has received.

"We're still at the stage where we're providing information to people," Keith McMahon said in an interview Tuesday. "But it does appear there is interest. We don't know the number (of interested parties) yet, but there are a lot of people looking at us based on the number of people who have requested information."

McMahon made the comments after Arctic Glacier issued its latest financial results. They show the company continues to bleed red ink, posting a net loss of $54.7 million or 16 cents per unit for the fourth quarter of last year, and a net loss of $84.9 million or 50 cents per unit for the year as a whole.

That compared with a loss of $22.1 million or 57 cents per unit in the final three months of 2010, and a loss of $82.7 million or $2.12 per unit for all of 2010.

The results did not have a negative impact Tuesday on the value of the fund's units, which are now traded on the Canadian National Stock Exchange (CNSX:AG.UN). They closed unchanged at six and a half cents each.

During a conference call with analysts Tuesday, in which he declined to field any questions because of the ongoing court case, McMahon said the company's most pressing concern is to compete the recapitalization. It was launched Feb. 22 in Canada under the Companies Creditors Arrangement Act (CCAA) and a short time later in the United States under Chapter 15 of the U.S. Bankruptcy Code.

The ice maker has been rocked in the last couple of years by a prolonged antitrust investigation in the United States and by related civil litigation on both sides of the border.

After exhausting all options for refinancing the company over the past year, a liquidity crisis forced it to seek protection from the courts until it can find either a buyer or an investor.

In the meantime, an additional $50 million was made available to enable it to continue operating and paying its suppliers while the recapitalization process unfolds. Any remaining litigation against the company also was stayed until it emerges from CCAA protection.

McMahon said a big chunk of last year's $84.9-million loss was due to costs arising from its litigation and financing woes, which included settling a number of class-action suits on both sides of the border.

If those costs are excluded, the loss would have been $27.9 million. That was mainly caused by increased amortization, higher financing costs, a loss on the settlement of convertible debentures and lower earnings before interest, taxes, depreciation and amortization (EBITDA).

McMahon said 2011 EBITDA was down 14 per cent to $43.6 million, largely because of bad spring weather in 2011 and increased competition in West Coast markets.

But the fact it had EBITDA of $43.6 million shows "we still generate significant cash," he said.

Although the company has to keep a tight rein on expenditures, McMahon said it's "doing all of the things we typically would be doing" to prepare for spring and summer, its busiest seasons.

That includes hiring about 1,100 seasonal workers to bolster its regular staff of about 1,100. And while it's still early, he said company officials are hoping the unusually warm weather this spring is a sign of things to come.

Republished from the Winnipeg Free Press print edition March 28, 2012 B5

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