DME owed $18M, according to documents filed by Royal Bank of Canada

According to documents filed in P.E.I. Supreme Court by the Royal Bank of Canada (RBC) — Diversified Metal Engineering (DME), and certain guarantors, owed the bank $18M as of November 22, 2018.

Challenges included increased competition, infrastructure costs and new purchase

Diversified Metal Engineering was put into receivership Nov 26, after the Royal Bank of Canada reported the company defaulted on payment. (Brittany Spencer/CBC)

According to documents filed in P.E.I. Supreme Court by the Royal Bank of Canada (RBC) — Diversified Metal Engineering (DME), and certain guarantors, owed the bank $18,100,924.38, as of Nov. 22, 2018.

The company was put into receivership Nov. 26, after RBC reported DME had defaulted on payment. 

The receiver, Alvarez & Marsal, was called in by RBC and appointed by the court. RBC says the company did not oppose the appointment of a receiver. The court order states no one appeared at the receivership hearing for DME.

According to an affidavit sworn in by a senior director of RBC - DME has 150 employees at its P.E.I. operation and 100 employees at its location in Abbotsford, B.C. (Brittany Spencer/CBC)

Diversified Metal Engineering is a P.E.I.-based company that builds brewing systems for the craft beer industry. It also makes a range of stainless steel products for other industries. It had been in business for 27 years. 

According to an affidavit sworn by a senior director of RBC —​ DME has 150 employees at its P.E.I. operation and 100 employees at its location in Abbotsford, B.C.

Problems with acquisition, increased competition

In the document RBC says all of the directors of DME have either resigned or will be resigning. 

The bank's affidavit states RBC was informed by DME that its financial position declined due to "challenges related to the acquisition of the assets of Newlands Systems Inc....in Abbotsford B.C....a drop in revenue due to increased competition...dealing with certain unfavourable customer agreements...and significant infrastructure costs." 

RBC states DME also hired an outside financial advisor along with a "turnaround specialist" to help with the situation. 

The bank states the company would have required $5M in new capital to have continued, but according to RBC the company had no commitment from anyone to provide that money.

DME is a P.E.I. based company that builds brewing systems for the craft beer industry. It supplies breweries in 70 countries world-wide, as well as a number of breweries on the Island. (Nicole Williams/CBC)

RBC said it was advised by DME that the company was up to date on all sales taxes and government remittances.

On Tuesday the receiver said it plans to sell the business as a going concern with the hope of finding a buyer to reopen the company, and that it would be calling some workers back to complete projects.

The receiver said it will be paying employees owed wages and accrued vacation.

CBC has reached out to former DME management but has not received a response.

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