Mr. Christopher Morris reports
SEAIR ANNOUNCES COURT APPROVAL OF RESTRUCTURING PROPOSAL
On May 18, 2017, the Court of Queen's Bench of Alberta made an order approving the joint proposal of Seair Inc. and its wholly owned subsidiary, Seair Diffusion Systems Inc., dated April 10, 2017, pursuant to the Bankruptcy and Insolvency Act (BIA).
A copy of the approval order, as well as other information concerning the company's restructuring and the proposal, can be found on the website of the proposal trustee, FTI Consulting Canada Inc.
As a result of the company's continuing operational losses and its default on its obligations to its senior secured creditor and its secured debentureholders, the company entered into negotiations with its creditors concerning a restructuring plan, which culminated in the commencement of proposal proceedings under the BIA on April 10, 2017. Through the proposal, the company has sought to: (i) satisfy creditor claims, including the secured claims of its debentureholders; (ii) maximize recoveries for unsecured creditors; and (iii) facilitate the continued development and utilization of the company's proprietary diffusion technology.
The proposal was approved by the company's creditors at a meeting convened on April 26, 2017. The proposal is expected to result in better recoveries for the company's creditors than would be available in a bankruptcy.
The proposal, which will be implemented as soon as practicable, contemplates the following steps occurring in the following order:
- Pursuant to the approval order, all debt claims of the holders of the secured debentures will be converted to Series 2 preferred shares of the company on a basis of one new preference share for every dollar of claim (subject to a 5-per-cent levy payable to the Office of the Superintendent of Bankruptcy).
Pursuant to the approval order, all the existing equity of the company, including all outstanding preferred and common shares (but, for clarity, not the lender preference shares (as defined below) or the new preference shares), will be cancelled for no consideration, with the result that the current holders of the senior debt and the current holders of the secured debentures will then own all issued and outstanding shares of the company.
The company will apply to be delisted from the TSX Venture Exchange.
- Pursuant to the approval order, the new preference shares will be converted to common shares on a basis of one new common share (as defined in the proposal) for every new preference share.
Payments to the company's unsecured creditors will be financed by the holder of the senior debt.
The company's existing management will remain in place.
Pursuant to an agreement dated May 10, 2017, between the holder of its senior debt and the company, the senior debt holder has agreed to convert all of its debt claims against the company to Class A preferred shares (the lender preference shares). The conversion agreement was approved by the court as part of the approval order.
Because one of the company's directors is the sole shareholder and director of the senior debt holder, the transaction contemplated by the conversion agreement may be considered a related party transaction under Multilateral Instrument 61-101. Accordingly, the company intends to rely on the exemptions set forth in sections 5.5(b) and 5.7(d) to obviate the need for obtaining a formal valuation or minority shareholder approval in respect of such transaction. Currently, the senior debt holder does not own any shares in the company. If the transaction contemplated by the conversion agreement is completed, upon implementation of the proposal, the senior debt holder will own lender preference shares which are convertible to common shares of the company. If converted immediately upon implementation of the proposal, the senior debt holder would own approximately 24.5 per cent of the outstanding common shares of the company.
A further update concerning is expected to be provided once the proposal is implemented.
About Seair Inc.
Seair is a Calgary-based cleantech company. Seair has commercialized proprietary technology that can diffuse gases, such as oxygen, ozone and carbon dioxide, into liquids more effectively and with lower power consumption than the competition.
We seek Safe Harbor.
© 2017 Canjex Publishing Ltd. All rights reserved.