Orbite seeks stay of proceedings amid worsening finances

By Davide Ghilotti
Published: Thursday, 27 April 2017

Production operations will be suspended at the Cap-Chat HPA facility while the company assesses options to restructure its debt.

Canadian high-purity alumina (HPA) producer Orbite Technologies Inc. announced it has filed for stay of proceedings on creditors under the Bankruptcy and Insolvency Act, as the company’s debt burden became difficult to manage under current circumstances.

Orbite’s decision to enter the process – aimed at preventing the insolvency from worsening – has come after a series of issues incurred at the company’s recently-opened HPA plant in Cap-Chat, Quebec, related to the electrical heating system of the supplied calcination equipment.

This added to existing external capital costs and could have led to a default of the company’s credit facilities – a scenario Orbite wanted to avoid.

The company said the move is "the best way to protect all stakeholders and will best facilitate its efforts to renegotiate its debt".

Under the terms of the Notice of Intention (NOI) that was filed, a 30-day stay of proceedings will take place to prevent creditors to seize the company’s assets, while restructuring plans are pursued. This period can be renewed by a court order.

Production operations will be suspended while a solution to raise sufficient capital to meet its credit necessities is found.

"Failure by the company to achieve its financing and restructuring goals will likely result in the company becoming bankrupt," Orbite said in a statement.

PricewaterhouseCoopers Inc. has been appointed as the company’s trustee in the proceedings.

Orbite’s shares are expected to be suspended from trading on the TSX. The suspension will last for as long as the company will not meet the requirements for renewed listing.

The Cap-Chat plant finally started running in October last year. Production output reached 1tpd HPA by the end of February.

This article from the May Industrial Minerals magazine was  first published online  on 4 April 2017.