SPECIAL REPORT: Prairie fleet takes a step back to move forward

WINNIPEG — A number of negative economic pressures backed Winnipeg Motor Express into a corner, but the carrier says it’s confident it will come back out on top after a bit of restructuring.

The fleet filed for creditor protection in mid-May after the high price of diesel, over-capacity and a slumping U.S. dollar began to squeeze its profits.

By filing under the Companies’ Creditors Arrangement Act, WME was able to begin a restructuring and refinancing plan to allow it to carry on as usual.

“The environment trucking companies have been forced to operate in during the last two years has been severe,” said President Brian Page in an interview. “The company is continuing as is, just on a smaller scale.”

In fact, the Winnipeg-based fleet is about half the size as it was when it filed the court order a couple of months ago.

The carrier was formed in 1989 and primarily provided east-west domestic service moving full loads of consolidated shipments for distribution in western Canada. Opportunity arose for routes into and out of the U.S., and like so many other cross-border carriers, the fleet grew on the strength of the U.S. economy.

Restructuring of WME could involve the sale of the company

By 2004, about 70 percent of the miles were being run south of the border, which also made up about 70 percent of the annual revenue — estimated to be between $40 – $45 million.

In 2006, a management-led buyout of the carrier provided new ownership for the 243-truck and 420-trailer fleet. The debt taken on by the new owners, compounded by negative market activity eventually led to the filing for creditor protection.

“By filing for creditor protection, your seeking a stay from actions sought from creditors against the company in order to reorganize the finances,” explained Page. “The other thing it does, which is a benefit, is it brings in a court-appointed monitor to referee the situation and it really allows you to focus on restructuring.”

Through the restructuring – monitored by Rob McMahon, vice-president of Ernst & Young Winnipeg – the carrier has reduced its fleet size and restructured their service offerings. At the time of the initial court order, the fleet was made up of 155 company drivers and 80 owner-operators. That’s now down by 26 owner-operators and 30 company drivers as the company slashed its customer base.

That said, it managed to keep all but two of its top 25 customers. More importantly, the fleet is able to keep up with the bills coming in and has prepared cash flow until Aug. 1, with the initial creditor protection court order extended until July 31.

“The folks doing business with us are still getting paid, our owner-operators continue to get paid and our drivers continue to get paid,” noted Page.

Moving forward, part of the restructuring process could involve a sale of the company and there are five serious buyers, according to Ernst & Young. But for a deal to be done, Page said it would have to maximize stakeholder value for the investors, creditors, employees and customers.

One thing is for sure, says Page, "We’re not filing for bankruptcy and we’re not even contemplating it."