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Springer Aerospace sale hinges on liabilities

Proposed deal for Sault-area firm will be considered by a Toronto judge on April 11
Springer Aerospace offers maintenance, repair and overhaul (MRO) services from its facility east of Sault Ste. Marie

Springer Aerospace Holdings Ltd. is negotiating with a prospective purchaser of the Echo Bay-based aircraft maintenance, repair and overhaul firm.

If approved next week by Justice Michael Penny of the Superior Court of Justice, the proposed sale would release Springer from insolvency protection under the Companies' Creditors Arrangement Act (CCAA), allowing it to continue with a clean balance sheet and involvement of current management.

The aircraft refurbisher received two offers in recent weeks.

One was for a proposed refinancing offer from a bidder; however, Springer's chief executive officer, Christopher Grant, said the proposal does not provide sufficient financing and will be rejected.

The other offer for the troubled aerospace firm was accompanied by a deposit that's being held by Springer's legal counsel pending execution of a satisfactory purchase agreement.

Judge Penny has described that agreement as "virtually done," but a key condition of the deal will be to transfer some unspecified Springer liabilities to a newly incorporated company.

"The reverse vesting mechanism is needed to ensure, among other things, that domestic and international regulatory approvals and licenses are not jeopardized," Grant said in an affidavit sworn last week.

"The potential transaction pursued contemplates the sale of the... business as a going concern, with current management continuing to participate in the business going forward. The transaction is expected to be structured in a manner that results in minimal disruption to employees and customers," Grant said.

Springer's largest obligation is to Caisse Desjardins Ontario Credit Union Inc., which is owed $5.7 million.

"While definitive terms of a share purchase agreement (SPA) have been finalized and the SPA has been executed, with signature pages held in escrow, [Springer] requires further time to consult with Desjardins and other key stakeholders, as well as to ensure that conditions can be satisfied or waived and the transaction closed in a timely manner," Grant has advised the court.

"It is expected that the sale proceeds will be sufficient to satisfy [Springer's] priority payables as well as a significant portion of Desjardins’ outstanding liabilities."

"The transaction, if approved, will allow the business to continue with a clean balance sheet, preserve employment, and ensure that work will continue in the normal course on customer aircraft."

The matter will be heard on April 11 in a Toronto courtroom.

— SooToday