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An Access Cash ATM, powered by Perativ, is seen at a store in Toronto, on July 19.Christopher Katsarov/The Globe and Mail

Perativ Holdings Ltd., a leading Canadian operator of ATMs, has filed for creditor protection after several years of operating losses, citing a pandemic-related decline in consumers’ use of cash, as well as two major thefts.

The company supplies banks with ATM management software and operates more than 7,000 “white label” ATMs. Such ATMs aren’t owned by banks, and are often located in small businesses that offer cash discounts or don’t accept credit payments.

Perativ and related companies were granted protection under the Companies’ Creditors Arrangement Act on July 3. On the same day, Perativ chief executive officer Chris Chandler resigned after an agreement could not be reached with the company’s lenders on a restructuring plan.

In a filing, court monitor PricewaterhouseCoopers Inc. said that because of Perativ’s financial challenges and the recent departure of its CEO, it would be “impossible to salvage” the company’s operations and 85 jobs without restructuring. A spokesperson for the company declined to comment.

While consumer use of cash has been declining for years in favour of credit cards and other e-payment methods, the pandemic accelerated the trend by cutting down on in-person payments. The volume of cash transactions fell by 62 per cent between 2016 and 2021, according to a 2022 report by Payments Canada.

To a larger degree than street ATMs, white label ATMs went unused as businesses shut down during the height of the pandemic. The number of Perativ ATMs decreased by nearly 30 per cent, from 10,352 in 2019 to 7,300 by 2022.

Perativ’s ATM transactions have reached 85 per cent of their prepandemic levels since COVID-19 restrictions were lifted, according to the filing. Fees charged on transactions are a source of revenue for the company.

Perativ relied on a handful of lenders to keep its business going. At the time of the CCAA filing, its main creditors were Bank of Montreal and a distressed debt fund managed by Sandton Capital Partners. The total liabilities on its balance sheet amounted to $90.6-million, including $75-million in long-term debt as of April, 2023.

The company posted operating losses of $25.8-million in 2020, $61.3-million in 2021 and $12.6-million in 2022. As a result, it laid off employees, cut pay, froze discretionary spending and sold its U.S. operations, among other measures.

Although cash and ATMs are not as widely used as they were, they are still crucial for some people. Andreas Park, a professor of finance at the University of Toronto, said the disappearance of ATMs could mean serious hardship for lower-income earners, who tend to rely on cash for day-to-day transactions – especially those who live in rural areas, where access to ATMs is already spotty.

In addition to declining use of cash, Perativ’s court filing says it was a victim of two costly heists.

In 2020, $2.6-million worth of cash originally provided to Perativ by Canadian Imperial Bank of Commerce was stolen from a third-party armoured cash transporter. Perativ reimbursed CIBC, but had to wait a year for full insurance compensation. The incident was cited as a reason for CIBC terminating a $150-million facility that provided cash for Perativ’s ATMs, which was vital to the company’s operations.

The filing also says that in 2022 Perativ was the victim of a different scheme, in which $1.7-million was stolen after thieves programmed the company’s ATMs to dispense unauthorized cash.

Perativ also revealed it has unsuccessfully searched for a buyer for the company. The maturity date for its loans had been extended several times from December, 2022, until this past May, while it looked for a bidder. It had been unable to reach a deal by the time it filed its CCAA application.

The next hearing in the CCAA case is scheduled for August, according to Philippe Jordan, the partner at PwC responsible for managing the restructuring. He said the court is expected to review and approve a potential sale of the company’s assets to a third party.

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