Ice maker Arctic Glacier Income Fund AG.UN-T said Thursday it has settled a lawsuit against it and reached agreement with its lenders as it reported a wider fourth-quarter loss but predicted better times ahead.
The Winnipeg-based company, which supplies packaged ice across Canada and the United States, said its loss was $28.5-million or 73 cents a unit, compared to a loss of $17.6-million or 45 cents in the fourth quarter of 2009.
Sales rose 5 per cent to $34.9-million as it added sales from an expansion into Arizona and Colorado.
“Arctic Glacier made substantive progress with a number of issues during 2010,” president and chief executive officer Keith McMahon said in a statement.
“We resolved major legal milestones and took steps to strengthen the fund's position to resolve current challenges and chart a course to a stronger future.”
The company said it has reached an agreement to settle a class-action suit filed by purchasers alleging the trust had violated U.S. antitrust laws by colluding with other ice makers to fix prices. Arctic Glacier has agreed to pay $12.5-million (U.S.) in instalments upon court approval.
“The allegations in the lawsuit are contrary to findings of the antitrust division of the U.S. Department of Justice, which, after a lengthy investigation, concluded in 2010 that no such industry-wide collusion took place,” Mr. McMahon said.
Earlier this month, the Department of Justice completed an investigation into the fund and decided to take no action against it.
“It's also worth noting that this action has not gone to trial and therefore the company has not yet had an opportunity to produce evidence refuting the allegation of involvement in industry-wide collusion. Nonetheless, Arctic Glacier has agreed to this settlement to put this matter behind us so that the company can move forward.”
Legal fees for the quarter totalled $12-million.
In a revised agreement with lenders, the Canada Pension Plan Investment Board and West Face Capital Inc., Arctic Glacier said it has received new credit terms that will increase available liquidity on its revolving credit facility “and provide improved financial flexibility.” The amendments will allow it to enter into the legal settlement agreements.
Arctic Glacier now has to refinance $90.6-million (Canadian) worth of convertible debentures maturing July 31. Mr. McMahon said the company's board has begun a review of financings and is contemplating “strategic alternatives,” language that generally indicates a company is considering its options, up to and including a possible sale.
For the full year, the company reported a loss of $94-million or $2.41 a unit, versus a loss of $15.9-million or 41 cents in 2009. The loss included a non-cash goodwill impairment charge of $76-million related to the company's Western U.S. reporting units.
Stripping out those one-time costs, the fund said it would have lost $30.2-million or 77 cents a unit in 2010, versus $4.6-million or 12 cents in 2009. Sales in 2010 rose 3 per cent to $233.5-million.
At the end of the year, the company held $169.7-million in debt, versus $162.3-million at the same time a year before.
