Creditors, carriers hope Ivaco buyout results in payment of owed cash

MONTREAL, (Aug. 10, 2004) — First he took a floundering Canadian basketball team, now a Canadian steel company.

Heico Cos. LLC, a turnaround firm owned U.S. financier Michael Heisley — best known in Canada for moving the NBA’s Vancouver Grizzlies to Memphis three years ago — has acquired three core businesses from troubled Montreal steel maker Ivaco Inc. for $375-million.

Ivaco, which has been under bankruptcy protection since last September, said yesterday that, assuming the court overseeing its restructuring approves the plan, Chicago-based Heico will purchase its main steel rolling, rod making and fastener businesses.

The steel maker recently had its protection from creditors extended a third time. Creditors of the three business units will be able to comment on the tentative sales at a court hearing set for Aug. 18. They will be able to vote on plans of arrangement that will be drawn up for each of the three units at a later date.

Earlier this year, Today’s Trucking reported how Quebec trucking CEO Claude Robert of Transport Robert attempted to unite a handful of Ontario and Quebec carriers hauling for Ivaco to withdraw services from the steel maker in a desperate move to recoup what they said are millions of dollars owed to them. Claude blasted the company at the time, saying Ivaco was hiding behind the blanket cover of Canada’s lenient bankruptcy laws.

However, the boycott was cut short. In an extremely controversial ruling the next day, an Ontario Superior Court ruled that the carriers were obliged to continue services since the debt owed pre-dates the Sept. 16, 2003 date Ivaco filed for bankruptcy.

Robert reluctantly obeyed the order, but vowed it would continue to seek what he said at the time was $2 million owed to him.

Today, when contacted by Today’s Trucking’s sister publication Transport Routier, Robert said it was too early to guess what the buyout means for creditors, or how much money will be returned.

“We don’t have a lot of details yet since the deal is much more complex than what is published in the newspapers,” he said. “‘The positive aspect is all Ivaco employees will keep their jobs and the plants will keep running. Some divisions are more attractive than others. The future will tell us which will survive to the reorganization.’

Ivaco has about 2,500 employees in Canada and the United States. Court filings when it sought protection from its creditors last fall showed it had a total of $262 million in debt and $178 million in unfunded pension liabilities, reports the Globe and Mail.

The deals it expected to close by the end of this year.

— with files from the Globe and Mail