The tough economic times have taken
their toll on yet another Northern Ontario icon as Earlton-based
Grant Forest Products is now reorganizing the financial affairs of
its Canadian operations under bankruptcy protection.
The company successfully sought the safety to refinance its debt under the Companies' Creditors Arrangement Act (CCAA) after General Electric Canada's leasing service attempted to force it into bankruptcy, according to reports by Bloomberg.
These efforts were denied as a result of approval for CCAA protection by an Ontario Superior court judge.
This means the company can continue to operate while it works with its secured lenders to seek better terms for debt payment.
Despite the move, officials with Grant Forest Products insist that things will continue to be "business as usual," with plants continuing to operate and no layoffs for staff.
"Bills are being paid, and we'll probably be in this process for another three or four months, but when we come out of it at the other end, we hope to be a stronger, more competitive company," said Bob Fleet, vice-president of woodlands operations with Grant Forest Products.
"We've done all the operational things, and really, a financial reorganization is just the last step in the process of changing how we do business and making us a little bit leaner."
As an analogy for the importance of the CCAA filing, Fleet compares the move to someone who approaches the bank to remortgage their home. However, the bank not only refuses the request but also demands their money back, leaving the homeowner to borrow money from a relative or put the house up for sale. Companies can instead seek room for refinancing under the CCAA, which Fleet admits "is not a perfect comparison, but it's the closest one I can make."
At peak periods, the company employed nearly 600 people in Ontario alone, and 715 across Canada. However, that number has dipped to 200 in Northern Ontario in recent years as the strong downturn in the global economy and the United States' housing market has affected operations.
These issues have also affected the company's bottom line, with the closure of the company's Timmins mill in 2006 and industry price changes leading to a drop in sales from $506 million in 2004 to $184 million in 2008.
The company's Englehart oriented strand board (OSB) mill has operated on a reduced number of shifts through the winter, but an upswing in orders leads Fleet to speculate that full production could resume by from July through to September and possibly beyond.
Out of the 66 OSB mills in North America, Grant Forest Products' Englehart facility is just one of 10 which continues to operate, and is one of the largest on the continent.
Indeed, Fleet anticipates that the refinancing under the CCAA will allow the company to see renewed strength in the coming years. In particular, he expects Grant will be able capitalize on vast infrastructure investments by the federal and provincial governments, as the company produces concrete forms used in the pouring of concrete for items such as bridges.
He also credits the company's Earlton value-added mill with being able to relieve some of the market pressures as it makes use of products from its Englehart facility for use in its own increasingly popular product lines. These include items such as a foil-coated OSB panel, which can be used for insulation in roofing.
"We've introduced a number of products that have really helped us diversify our offering to our customers and help keep our Englehart mill running. We've done the downsizing and rightsizing, we've introduced some new products, and we're doing the financial organization, which we really view as the last step to get us through this cycle and help weather the storm."
