Lenders to Canadian water manufacturer Flow Beverage are to take on ownership of the business.
Last week, the company announced it had received repayment demands from its lenders, accompanied by notices of intention to enforce security under Canada’s Bankruptcy and Insolvency Act due to “alleged defaults” on “certain” secured loans.
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In a fresh statement released yesterday (2 September), Flow Beverage said the deal with NFS Leasing Canada and RI Flow involves a structured foreclosure, whereby the ownership of its business will shift to the lenders or their designated representative.
The decision comes after what Flow Beverage described as an “exhaustive strategic review” that “considered all alternatives in the circumstances” to address its “liquidity challenges”.
To facilitate the transition, the lenders have consented to provide bridge financing, enabling the company to continue its operations during the implementation of the transaction.
Nicholas Reichenbach stepped down as executive chairman and CEO of Flow Beverage last week.
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By GlobalDataAs part of the restructuring transaction, the lenders, or their assignee, will acquire “substantially all” the company’s assets in exchange for extinguishing its debt.
Some of the debt will remain with Flow Beverage but the statement said the company will have “an improved and deleveraged balance sheet”.
After the completion of the deal, the the company’s remaining assets and liabilities will be wound down under court supervision.
The new owners will offer employment to an unspecified number of Flow Beverage’s workforce.
The business, established in 2014, has faced recent financial challenges, with the latest reports showing a 17% drop in consolidated net revenue to C$10m for the quarter ending 30 April, alongside widening net losses of C$10.4m, compared to C$7m in the same period of the previous year.
