Arctic Glacier Income Fund said Wednesday it will file for a court supervised restructuring under the Companies' Creditors Arrangement Act that the ice maker said could result in a sale or recapitalization of the business.
The process has the support both of Arctic Glacier's secured lenders and two of its unitholders, Coliseum Capital Management and Talamod Asset Management, the fund said.
Arctic Glacier's secured lenders have agreed, subject to court approval, to provide up to $50-million in debtor-in-possession financing to fund operations during the CCAA process.
The fund said an application will also be made seeking recognition of the CCAA proceedings in the U.S. under Chapter 15 of the U.S. Bankruptcy Code.
Arctic Glacier said it expects to maintain all operations at their normal capacity in both Canada and the United States during the process.
No layoffs or lease terminations are planned and the fund said it intends to pay its suppliers as usual, including amounts owed prior to the CCAA filing.
Keith McMahon, president and chief executive of Arctic Glacier, said the court supervised process is the company's best option to secure its future.
“The CCAA process would allow the time and stability required to implement the solicitation process, while continuing our normal day-to-day operations,” Mr. McMahon said in a statement.
Arctic Glacier units were delisted from the Toronto Stock Exchange last month and moved to the Canadian National Stock Exchange.
The fund warned in November that its future was in doubt even as its financial results improved as it was in breach of financial covenants under its credit facilities as of Sept. 30.
It said at the time that talks with its lenders who had served notices of default were continuing, but could make no assurances as to the outcome.
Earnings for the three months ended Sept. 30, the fund's most recently reported quarter, amounted to $21.6-million (U.S.) or two cents per diluted unit. That compared with a loss of $45.7-million or $1.17 per unit in the same 2010 period when the fund had fewer units outstanding.
Revenue totalled $111.8-million, up seven per cent from $104.8-million in the same period a year earlier.
The fund said that results of both periods were “significantly affected” by costs associated with a prolonged antitrust investigation and related litigation, a review of financing and strategic alternatives, as well as goodwill and intangible asset impairment charges.
Arctic Glacier has 39 production plants and 47 distribution facilities across Canada and the northeast, central and western United States.