tony08 wrote: In "LA PRESSE" this morning
Shareholders of Xebec Adsorption believe they were misled by the supplier of solutions to energy producers before it placed itself safe from its creditors. To avoid finding themselves empty-handed, they ask to be involved in the ongoing legal process.
The shareholder behind this move is Simon Arnsby, who presents himself as a "significant" security holder of the Quebec company since 2012. In a letter sent Wednesday to Judge Christian Immer, of the Superior Court of Quebec, the investor addresses several criticisms of Xebec.
He calls for the establishment of a committee to represent small shareholders. In his opinion, the latter are currently “unrepresented” and “do not have the means to participate” in the ongoing procedure or to “understand” it.
The shareholders were absolutely not warned that Xebec was in danger of filing for bankruptcy, which would have allowed them to assess the risk to [their investment] and to have time to prepare for this eventuality.
Simon Arnsby, in a letter to Judge Christian Immer
He claims that this scenario was not mentioned in the information disseminated by the company or the public statements of its leaders.
Based in Montreal, Xebec turned to the Companies' Creditors Arrangement Act (CCAA) on September 29th. The process could lead to the sale of the assets, allowing secured creditors to recoup all or part of their stake. Shareholders are not part of this group.
As of August 31, the company's liabilities amounted to 282 million, compared to 503 million for its assets.
“There is a reasonably high probability of generating value for shareholders,” writes Mr. Arnsby, who expresses the wish to see the judge approve a plan to retain key employees as well as sums to guarantee their compensation.
That way, shareholders will be better represented, he says.
No warning
Founded in 1967, Xebec specializes in carbon capture technologies as well as the production of hydrogen, renewable natural gas, oxygen and nitrogen. It employs nearly 600 people worldwide, including 157 in Quebec, and operates a plant in Blainville.
In 2021, its annual revenue was 126 million.
Made public on August 10, Xebec's second quarter financial report contained some bad news, without however mentioning dramatic scenarios.
"This filing [under the CCAA] was made in the context of a considerable increase in revenues and rapid growth in the order book," says the disgruntled shareholder.
While Xebec's revenue was growing, the company had nevertheless announced a reduction of approximately 13% of its North American workforce last July.
From 2019 to 2021, the company carried out no less than 20 transactions, which made it possible to consolidate its growth. The integration of these acquisitions weighed on its financial results.
The Fonds de solidarit FTQ ($15 million), the National Bank ($7 million) and Export Development Canada ($15 million) are among the company's main creditors. The Caisse de dpt et placement du Qubec (CDPQ) was the main shareholder of Xebec (7.05%) after having injected 50 million into it in 2020.
Too close?
In his missive, Mr. Arnsby also questions some recent decisions by Xebec alleging conflicts of interest. He points out that the company is represented by Osler, Hoskin & Harcourt LLP while Brian Levitt, one of the directors of Xebec, was previously co-president of this law firm.
Another board member, Peter Bowie, previously led Deloitte China and the accounting firm's Canadian operations. However, the controller of the file is Deloitte, writes Mr. Arnsby. Finally, National Bank is in charge of the investment solicitation and sale process even if it appears on Xebec's list of creditors.
Asked to comment on Mr. Arnsby's observations, Xebec had not responded to questions from La Presse on Wednesday afternoon.