Cambridge’s Innovative Steam Technolgies shuts down
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.
Innovative Steam Technologies on Conestoga Boulevard in Cambridge was put into receivership on May 1.