Puratone Corp. was expected to be in a Winnipeg courtroom Oct. 30 asking for more time to secure a buyer.
According to an affidavit filed by Puratone chief executive officer Raymond Hildebrand and two associated companies, extending protection under the Companies’ Creditors Arrangement Act until Nov. 12 should result in a sale.
Puratone entered court protection in mid-September and was granted protection until Oct. 12 and authorized to receive protection financing from the Bank of Montreal to a maximum of $6 million.
The company owes $86 million to secured creditors Bank of Montreal, Farm Credit Canada and Manitoba Agricultural Services Corp.
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At that time, monitor Deloitte & Touche was directed to develop and begin a sale process for all or part of the company.
On Oct. 10, an extension was granted to Nov. 2.
The affidavit acknowledged that operating under a stay of proceedings and protection financing has provided the company with some stability.
In its first report, the monitor revised the sale process to allow comparison of different letters of intent through a standardized offering schedule.
Interested parties were invited to submit letters of intent by Oct. 15.
“The notice of intent process also contemplated the successful bidder would include an asset purchase agreement with the applicants on or before Oct. 22, which would be subject to court approval,” said the affidavit.
Three letters of intent were submitted and reviewed by the secured lenders and Puratone. By Oct. 17, all parties agreed on one proposal.
However, one of the bidder’s terms is that the applicants not disclose the identity of the bidder or the contents of its letter of intent.
“The successful bidder is not prepared to consent to public disclosure of its identity until our asset purchase agreement has been completed and executed by the parties and an appropriate media disclosure protocol entered into,” said the affidavit.
The bidder said the information in its proposal is confidential and commercially sensitive and could be detrimental if released before the sale is completed.
The affidavit said a stay to Nov. 12 should allow enough time for an agreement to be concluded. The matter would then return to court for approval.
Time is a concern. The affidavit said Puratone has enough money to continue operating through the extended stay period but not much longer.
“If an asset purchase agreement cannot be finalized and approved by the court quickly, it will be necessary to either seek an increase in the DIP loan or initiate a wind-down,” the documents said.
