Forester Teal Jones to restart operations
Interim financing deal reached after Surrey firm filed for court protection
Surrey-headquartered forestry company Teal Jones Group has reached an interim financing deal that will allow it to restart operations and continue reorganizing its business under court protection from its creditors, according to documents filed with the B.C. Supreme Court.
On April 25, Teal Jones filed for protection from its creditors due to a cash crunch that left it without enough revenue to keep up with its bills. On May 3, B.C. Supreme Court Justice Gordon Weatherill granted an extension of that protection until Aug. 1 while the company continues its reorganization and seeks a potential sale.
“The feedback following this (Companies and Creditors Arrangement Act) filing from our stakeholders has generally been positive,” Gerrie Kotze, the company’s vice-president and chief financial officer, wrote in an affidavit to the filing. Teal Jones didn’t respond to a Postmedia inquiry by deadline, but the extension of its initial order was expected to support bringing employees, including 400 at its operations in Surrey, back to work. That will restart its revenue flow through the extension period.
In its initial filing on April 25, the company said it needed to raise $60 million in financing, including $3 million within 10 days of filing to get its operations back on track.
In his affidavit, Kotze said within three days, it had reached agreements to sell property Teal Jones owns on Haida Gwaii and struck a deal to sell the company’s interest in softwood lumber duties being held on deposit that are expected to be refunded upon resolution of the Canada-U.S. softwood lumber dispute.
The accounting firm PwC was appointed as monitor to the Teal Jones proceedings and in its initial report said the sale of properties on Haida Gwaii raised $864,000 and the sale of its expected refund of softwood duties an additional US$11 million.
Teal Jones, with the monitor’s help, also reached a restructuring support agreement with its key lenders, led by the U.S. bank Wells Fargo, which will see interim financing extended to the company to carry it through to Dec. 21, 2024, according to documents.
“The petitioners’ team have spent considerable time explaining that this filing is the result of liquidity crisis and not a circumstance where the value of the Teal assets is lower than its debt obligations,” Kotze said in his affidavit.
Kotze added that PwC’s initial valuations show the company’s assets hold $400 million in equity after all of its debts are considered. In its report, PwC said that “while in the very early stages of the CCAA proceedings, matters have unfolded in a positive manner and Teal Jones has worked quickly to focus efforts on seeking a restructuring solution.”
In his affidavit, Kotze said a deal to sell and lease back the land its Surrey mills operate on remains a potential source of additional financing, “if this makes sense within the context of the CCAA and petitioners’ restructuring as it progresses.”
He said there is also additional interest in the 57 per cent stake Teal Jones owns in a new sawmill that it is building in Louisiana.
Teal Jones, in recent years, diversified operations centred on logging and milling operations in B.C. with investments in the southern U.S. It now owns facilities in Oklahoma, Virginia and Mississippi.
In its report, monitor PwC said Teal Jones is still in the process of developing what is known as a sales and investment solicitation process, which could involve a sale of the company. It expected that to be filed within 10 business days.