Cannabis company FIGR Group granted creditor protection
ACOA among company’s creditors
Facing a debt of over $200 million, FIGR Group has been granted creditor protection while it seeks a buyer, according to court filings by the monitor.
The Ontario Superior Court granted the protection until Jan. 29, but that could be extended. FTI Consulting was appointed as the monitor.
After initial excitement, a number of cannabis companies in Canada began to face trouble early last year, but at the same time FIGR was expanding.
The FIGR Group is comprised of three companies. That includes two processing facilities — FIGR East in Charlottetown, also known as Canada's Island Garden, and FIGR Norfolk in Simcoe, Ont. — and Toronto-based FIGR Brands, which owns a majority stake in the two processing companies and provides head office services. All together FIGR employs about 200 people, approximately 144 of them at the Charlottetown site.
According to FTI's filings, FIGR has been operating at a deficit since its launch. Debt at FIGR East in Charlottetown is about $93 million, much of it as a result of expansion of its indoor grown facilities in recent years. The FIGR Group had been largely reliant on indirect subsidiaries of its parent company, North Carolina-based Pyxus International Inc., for financing.
We maintain our belief that there is value in FIGR.— Pieter Sikkel, president, Pyxus
Pyxus has had its own financial troubles, the FTI report says. It recently emerged from financial restructuring. It is FTI's understanding that the indirect subsidiaries of Pyxus are no longer prepared to continue funding FIGR Group "without an exit strategy."
Among FIGR's creditors is ACOA, which the report says was owed about $625,000 as of Nov. 30. Some Island businesses are owed money and the province of P.E.I. is owed $430,000 in property taxes.
Parent company restructuring
In a news release, Pyxus says it is divesting its cannabis business to focus on tobacco and e-liquids.
"We maintain our belief that there is value in FIGR and its growth can be accelerated with the right capital structure and partner," said Pyxus president Pieter Sikkel in the release.
"The completion of our financial restructuring, Global Operations Efficiency Program, and continued investment in agronomy, traceability and sustainability are proving to be of significant value to our tobacco customers as we have started to work together on long-term strategic partnerships that support our objective of growing our market share."
The creditor protection will allow for a potential sale of FIGR's business as a going concern while continuing operations and preserving the value of the company for the benefit of all of the FIGR's stakeholders, including preserving jobs for its employees, the FTI report says.
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With files from Brian Higgins