Re­ceiver­ship

Cam­bridge’s In­no­va­tive Steam Tech­nol­gies shuts down

Waterloo Region Record - - Front Page - JAMES JACK­SON Water­loo Re­gion Record jjack­son@therecord.com

CAM­BRIDGE — Af­ter more than 25 years in busi­ness, Cam­bridge­based In­no­va­tive Steam Tech­nolo­gies has been put into re­ceiver­ship and is now per­ma­nently closed.

The com­pany, which be­gan op­er­a­tions in 1992, spe­cial­ized in boiler re­pair and man­u­fac­tured steam gen­er­a­tors that cap­tured and used steam for elec­tric­ity pro­duc­tion and en­hanced oil re­cov­ery. An es­ti­mated 76 em­ploy­ees worked for the com­pany.

The com­pany, known as IST, was placed in re­ceiver­ship May 1. A note posted on the door of the head of­fice at 549 Con­estoga Blvd. states they are now “per­ma­nently closed” and di­rects any­one with ques­tions to con­tact Deloitte Re­struc­tur­ing Inc., the re­ceiver re­spon­si­ble for han­dling the com­pany’s af­fairs.

A re­ceiver is re­spon­si­ble for re­cov­er­ing out­stand­ing loans and may liq­ui­date as­sets or sell a busi­ness.

In­no­va­tive Steam leased its 96,000-square-foot head­quar­ters from Sky­line Com­mer­cial Real Es­tate, and also leased a fa­cil­ity at 1 Nat­u­raWay in Cam­bridge and 100,000 square feet of of­fice and ware­house space in Delta, B.C.

Calls to In­no­va­tive Steam pres­i­dent Jim McArthur and vi­cepres­i­dent Chris Ritchie were not an­swered. War­ren Le­ung, se­nior man­ager at Deloitte, also did not re­spond to an in­ter­view re­quest.

Efforts to con­tact the lawyer rep­re­sent­ing In­no­va­tive Steam and its ma­jor­ity share­holder, Ful­crum Cap­i­tal Part­ners, were also un­suc­cess­ful.

How­ever, le­gal doc­u­ments sub­mit­ted as part of the re­ceiver­ship process paint a bleak picture for the com­pany.

Ac­cord­ing to an af­fi­davit by John Borch, vice-pres­i­dent of loan man­age­ment for HSBC Bank Canada, for the three­month pe­riod end­ing March 31, 2018, In­no­va­tive Steam lost an es­ti­mated $1.7 mil­lion and the com­pany’s li­a­bil­i­ties ex­ceeded as­sets by ap­prox­i­mately $11.2 mil­lion.

“The in­abil­ity to con­tract new long-term projects from ma­jor cus­tomers and ob­tain fur­ther fi­nan­cial sup­port from its share­hold­ers is cat­a­strophic,” the af­fi­davit said.

The com­pany owed HSBC more than $17 mil­lion in se­cured debt and owed Ful­crum more than $10 mil­lion in se­cured debt. It also owed more than $4.7 mil­lion in un­se­cured debt to al­most 200 other cred­i­tors, in­clud­ing un­known amounts to the City of Cam­bridge and En­er­gyPlus.

At the end of March, In­no­va­tive Steam had ap­prox­i­mately $6.7 mil­lion owing through ac­counts payable, of which about $3.9 mil­lion was more than 90 days over­due. Two sup­pli­ers were with­hold­ing ship­ment of prod­ucts until pay­ment of out­stand­ing in­voices was done.

Ac­cord­ing to Burch’s af­fi­davit, “Ful­crum has re­peat­edly in­formed me that they are un­will­ing to in­ject any fur­ther eq­uity” into the com­pany.

The doc­u­ments of­fered lit­tle in­sight into the fate of the com­pany’s em­ploy­ees, but the fed­eral Wage Earner Pro­tec­tion Pro­gram of­fers some com­pen­sa­tion to el­i­gi­ble em­ploy­ees who are owed money from a bank­rupt em­ployer or one who is in re­ceiver­ship. Em­ploy­ees may be en­ti­tled to a pay­ment for un­paid wages, va­ca­tion pay, ter­mi­na­tion pay and sev­er­ance pay that the em­ployee earned or be­came en­ti­tled to in the last six months be­fore a bank­ruptcy or re­ceiver­ship.

In 2015, In­no­va­tive Steam was pur­chased by Ful­crum for $35 mil­lion from Ae­con Group Inc. As re­cently as 2011, In­no­va­tive Steam em­ployed 120 at its plant on Con­estoga Boule­vard and sold more than 200 steam gen­er­a­tor units in 19 coun­tries. Clients in­cluded Gen­eral Elec­tric, Saskatchewan Power, and Shell Off­shore Inc., a sub­sidiary of Royal Dutch Shell.

Ac­cord­ing to doc­u­ments sub­mit­ted as part of that pur­chase agree­ment, In­no­va­tive Steam listed more than $13.8 mil­lion in cash and cash equiv­a­lents at the end of 2014, but by the end of March 2018 the com­pany had zero cash.

PETER LEE WATER­LOO RE­GION RECORD

In­no­va­tive Steam Tech­nolo­gies on Con­estoga Boule­vard in Cam­bridge was put into re­ceiver­ship on May 1.

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