Setback for St. Lawrence fluorspar mine sale as buyer fails to pay full deposit
Court extends bankruptcy protection until Feb. 26 as all options explored for insolvent mine
There's been a setback in the effort to find a new owner for the insolvent fluorspar mine in St. Lawrence, with the successful bidder failing to live up to a key element in the sales process.
The development means it could be months before the fate of the mine is known, but Energy Minister Andrew Parsons and Burin-Grand Bank MHA Paul Pike say there will be layoffs at the plant as early as this week.
"People are very disappointed out there," Pike said Wednesday afternoon. "It provided a number of jobs for our area. Probably the largest employer, it was the largest employer for our region."
Parsons said the plant was being kept in what's known as "warm idle" mode by more than 30 employees. That number will drop to one or two staff members along with hired security, according to Parsons, as they move the plant into "winterization mode."
The development also adds to the uncertainty of the more than 200 people who worked at the Burin Peninsula mine and the numerous creditors who are owed money.
The accounting firm overseeing the process, Grant Thornton, had planned to seek court approval Wednesday for a sale of the idled mine, which closed in February after the owner, Canada Fluorspar Inc., ran out of cash.
Grant Thornton had selected a buyer from multiple bidders during the sale and investment solicitation process and anticipated Justice Alexander MacDonald would formalize the deal in Newfoundland and Labrador Supreme Court on Wednesday morning.
But the senior creditors withdrew support for the deal after the preferred bidder paid only a portion of the deposit, which is a key condition of any approval.
The lawyer for Grant Thornton, Geoff Spencer, said the bidder was given several extensions to pay the full deposit but failed to do so.
"We are not in a position to proceed with the sale approval order today, unfortunately," Spencer told the court.
So is the deal off? No one is willing to go that far. But, Spencer said, "we need to look at other options and alternatives going forward for this company."
Phil Clarke, Grant Thornton's court-appointed monitor, told reporters he believes the successful bidder is still interested in the mine.
"Not closing a sale is not positive but it's also not unheard of in insolvency proceedings to have pitfalls and twists and turns," Clarke said.
MacDonald agreed to a request from Grant Thornton to extend CFI's bankruptcy protection until Feb. 23.
The mine will continue to be maintained with minimal staff in standby mode in hopes that a deal will be formalized over the next four months and the operation can be reactivated.
Clarke said there is enough cash on hand to keep the mine in standby mode until late winter.
"Everybody is still supportive of finding an operating bidder for the mine. That has not changed," said Clarke.
The mine is being sold under the Companies' Creditors Arrangement Act.
According to documents filed with the court by Grant Thornton, Canada Fluorspar owes roughly $95 million to three secured creditors, nearly $23 million to unsecured creditors, and just under $10 million for capital leases of equipment and machinery.
The provincial government is a secured creditor, with an outstanding loan of $17 million. The province also cost-shared a $6.5-million injection of cash to keep the mine in care and maintenance mode and to fund the sales process.
It's estimated that $1.5 million is owed to Burin Peninsula-based companies, but Spencer suggested Wednesday that unsecured creditors likely won't see any money if the sale proceeds.
The only parties likely to see any proceeds from any sale will be the senior secured creditors, said Spencer.
Parsons said Wednesday's development is a step backward but he's confident the mine will reopen.
"We have faith, we have optimism that this asset has value. That there is product left in that mine, there's expertise in that workforce and that there is a future here," he said.
To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.
By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.
Become a CBC Account Holder
Join the conversation Create account
Already have an account?