Arctic Beverages is insolvent and has filed papers giving it creditor protection while it puts together a plan to restructure or find a buyer.
The company-initiated action gives it 30 days to file a proposal for creditors to vote on and prevents creditors from taking legal action in the meantime. The company continues to operate as a going concern.
PWC has been retained to manage the process, but David Johnson, a partner in PWC's Winnipeg office, said it is being led by the company.
"The company is exploring to see if there is an ability to market the business and find new ownership," Johnson said.
In an open letter to creditors, Harold Bonazew, the general manager of Arctic Beverages, said the company has "entered into a sale process aimed at ensuring stable, long-term ownership is put in place... We have negotiated an interim financing agreement to ensure ongoing purchases and financial commitments can be met as we move forward."
The Winnipeg-based bottler and distributor of Pepsi and FritoLay products throughout northern Canada is owned by Tribal Councils Investment Group (TCIG).
'It's still a great company. We wanted to have the business continue on. It's good for the people of the north. We advanced money to get the business operating through the process'
That investment firm, owned by the seven Manitoba First Nations tribal councils, has been in the midst of an overall restructuring for close to a year since former longtime CEO Allan McLeod was ousted.
Arctic Beverages was TCIG's first acquisition and has been its most profitable operating company since the late '90s.
It has been named Pepsi's Canadian bottler of the year three times since 1998 and was the North American bottler of the year in 2007.
The creditor list PWC filed with the Office of the Superintendent of Bankruptcies totals more than $25 million, including more than $11.5 million owed to TCIG.
The next largest creditor is Exchange Income Corp. at $5.8 million.
Exchange has been associated with TCIG in various ways over the years. Ex-TCIG CEO McLeod is a former Exchange board member.
It was Exchange that provided financing to Arctic to help it get over the hump.
"It's still a great company," said Mike Pyle, CEO of Exchange Income Corp. "We wanted to have the business continue on. It's good for the people of the north. We advanced money to get the business operating through the process."
Pyle did not rule out the possibility Exchange Income Corp. might make an offer for the company, but said it has not made that decision.
"We are a potential buyer," he said, "but there are lots of potential buyers. There will be lots of potential interest."
Many believe Arctic is in its current state because of the problems at TCIG, its parent company.
A year ago, a special meeting of shareholders elected a new board of directors. A month later, in early May, McLeod and five other senior executives were fired.
There had been simmering disagreements between McLeod and some shareholders that resulted in legal action.
The Free Press has reported on extravagant expenses racked up by TCIG's former senior management in past years, including the operation of a cash-draining corporate jet.
But the newly installed board, which has had key turnovers since then, has not been able to hire management and right the ship.
That acrimonious management change and subsequent inability by the board to hire new leadership created what one source called a downward spiral.
Late last year, TCIG shuttered two other operating companies -- Precambrian Wholesale and First Canadian Transportation.
Last month, Domo Gasoline Corp. filed legal action seeking repayment of $555,000 from another TCIG operating company, First Canadian Fuels Ltd., for non-payment of invoices for fuel delivered to a number of gas stations.
It has long been rumoured TCIG's main secured lender, Royal Bank of Canada, lost faith in the company. RBC is listed as being owed $3.9 million by Arctic.
Pepsi Bottling Group is listed as being owed $1.2 million.
Sandy Lyver, a spokeswoman for Pepsi Canada, said: "We continue to have a working relationship with Arctic, but are unable to comment further."
Including Arctic Beverages, the remaining TCIG operating companies are Famous Dave's barbecue restaurant in Winnipeg and First Canadian Health, a medical insurance claims-processing service based in Toronto.