Morris Industries may soon be sold
The assets of a Saskatoon-based agricultural equipment manufacturer that went into receivership could be sold to another company with deep roots in the province as early as this month.
Morris Industries Ltd., the public face of a group of companies, received protection under the federal Companies’ Creditors Arrangement Act (CCAA) in January after telling a court it could not pay its debts and continue operating.
Documents filed by its court-appointed monitor indicate that initial efforts to sell Morris Industries’ remaining assets failed to yield an “acceptable” offer, leading to further discussions with prospective bidders.
Just over a month ago, the monitor said in court documents, it received a letter of intent to purchase the troubled companies from Superior Farms Solutions LP, which operates the Regina-based company Rite Way Mfg. Co. Ltd.
Rite Way was founded in 1972 by Les Hulicsko, who started building hydraulically powered rock pickers, according to its website. The company has operations in Regina
and Imperial, Sask., where it makes harrows and discers.
The terms of the proposed purchase agreement are not available in public documents. Rite Way declined to comment on Tuesday. Lawyers representing Morris Industries did not respond to a request for comment.
While the deal was originally expected to close June 30, subsequent filings indicate the monitor could ask a court to approve the sale of “all or substantially all” of Morris Industries’ assets this month.
The assets of one Morris subsidiary, which operated in Virden, Man., were previously sold at auction earlier this year.
Morris Industries’ largest creditor, Bank of Montreal, is supportive of the proposed transaction, the documents state.
George Morris founded the company that became known as Morris Industries in 1929. It expanded to Yorkton two decades later, and subsequently built a plant in Minnedosa, Man.
Court documents state an ambitious growth strategy, launched by a new management team in 2017, allowed it to develop new products but was undermined by warranty issues and weak sales, the result of trade issues and bad weather.
That led to a “bulge” in inventory that put “additional strain on its working capital,” according to the documents.
By last spring, the company was in “significant arrears.” At the end of the year, the documents state, Morris Industries did not have enough cash to make payroll and meet other obligations.
It filed for protection under the CCAA, a process that allows corporations owing more than $5 million to restructure while avoiding bankruptcy, in early January.
At the time of filing, Morris Industries’ debts include $26.6 million owed to its “senior lenders,” almost $10 million owed to other lenders, $4.4 million payable to “significant secured creditors” and $12.7 million to various unsecured lenders.
The company has received $3.8 million in federal funding over the last several years. According to the documents, it does not have to begin repaying those funds until late 2020.