Atlas Cold Storage in deep freeze; dumping trucking assets

TORONTO, (Dec. 2, 2003) — The income trust of troubled logistics and warehousing company Atlas Cold Storage said yesterday it lost $9 million in its third quarter and will auction off the rest of its Canadian transportation operations, according to Canadian Press.

The trust, which owns North America’s second-largest network of cold-storage warehouses, said earlier this summer it would discontinue most of its trucking business in Alberta, but keep some operations. However, after further review, Atlas determined it would discontinue all other Canadian asset-based transportation, the company said in a release yesterday.

The company also announced it is continuing the suspension of its distributions to unitholders and was in breach of obligations of a $204.2-million credit line. Moreover, it warned that its earnings for 2001 and 2002 will be reduced even more than had indicated after reports of accounting irregularities in August. Profit for 2001 is now expected to be cut from $10.1 million to $7.4 million, and earnings for 2002 are expected to be cut from $16 million to $14 million.

Atlas expects to get about $7 million in an auction of its transportation assets and will use the proceeds to partly satisfy banking, lease and other obligations of Atlas Supply Chain Services Ltd., a wholly owned subsidiary. It will still require, however, a cash outlay of about $3.8 million during the winding up of operations in the fourth quarter of 2003 and the first quarter of 2004, the company added.

Last week, Atlas president and CEO Patrick Gouveia resigned and was replaced by Jack Scott a member of the Atlas board. In September, Atlas said the employment of chief financial officer Andrew Peters had been “terminated” and he resigned from the board of directors.

— from Canadian Press