Listed company Xebec Adsorption, a solutions supplier to renewable gas producers, is seeking refuge from its creditors.
Posted at 12:26 pm
In a press release, the companies announced Thursday morning that they are applying today for a preliminary order with the Superior Court under the Companies’ Creditors Arrangement Act (“CCAA”) and seeking recognition of the order in the United States under Chapter 15. Bankruptcy Code.
The objective is to cut off the resources of creditors to rehabilitate the company financially while soliciting investments or buyers for its assets, a process that must be approved by the court in time and place.
Xebec is advised by Osler, Hoskin & Harcourt and McDonald Hopkins and National Bank Financial.
Founded in 1967 and based in Quebec, Xebec has 9 manufacturing plants, 17 clean technology service centers and 5 sales offices in 4 continents. It has 670 employees as of June 30.
Caisse de dépôt is its largest shareholder with just 10.9 million shares or 7.05% of outstanding shares as of December 31, 2021. Xebec’s senior management and its directors collectively own 12, 7 million shares or 8.23% of the total.
More specifically, Xebec specializes in the production of hydrogen, renewable natural gas, oxygen and nitrogen, along with technologies for carbon capture. In 2021, its annual revenue will be 126 million.
As recently as March, Xebec sparked investor excitement after signing a memorandum of understanding with a US customer covering a potential order worth more than US$100 million. The company then talked about tripling its revenue in two years.
In terms of profitability, it is less impressive. It posted weak profitability quarter after quarter, which financial analysts blamed.
Warning signs
There was some bad news in the second quarter financial reports released on August 10.
In July 2022, Xebec announced a nearly 13% workforce reduction in North America. Later, in the same month, the company entered into a stay agreement with National Bank to amend the existing credit agreement as Xebec failed to meet the maximum ratio of total liabilities to tangible net worth under the credit facility. The credit facility under the stay agreement is available till September 30, 2022. On August 10, 2022, the outstanding amount of the credit facility was $25.3 million.
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