Temlam and Jager joint ventures file for bankruptcy
17/09/2008 - 13:03
Tembec Inc. announced September 15, 2008 that Temlam Inc. and Jager Building Systems Inc., a subsidiary of Temlam Inc., have made voluntary assignments in bankruptcy under the Bankruptcy and Insolvency Act (Canada). Temlam Inc. is jointly owned on a 50/50 basis by Tembec Inc. and Société générale de financement du Québec (SGF).
These assignments in bankruptcy follow the receipt, by Temlam Inc. and Jager Building Systems Inc. of Notices of Intention to Enforce Security issued by HSBC Canada bank on September 3, 2008. The companies were unable to cure defaults under their financing arrangements due to current economic conditions in the industry.
"Tembec has recently completed a successful recapitalization which has given us a strong balance sheet and liquidity position, said James Lopez, President and CEO of Tembec. It would not be prudent to risk further exposure to these joint ventures through injection of additional capital at this time in light of the current business climate and housing market. For this reason, Tembec and SGF have decided to support the decision of the Boards of Directors of the two companies and endorse this course of action. We regret the impact that this will have on employees, customers and suppliers, but this is the most prudent decision."
As a result of the filing, Tembec Inc. will immediately cease proportionately consolidating the financial results of Temlam Inc. and Jager Building Systems Inc. in its financial statements. This will result in a reduction of approximately $50 million in the carrying value of Tembec Inc.’s assets and liabilities with no material impact on earnings. During the nine-month period ended June 2008, the two ventures had increased Tembec’s reported sales by $34 million and had generated negative EBITDA of $4 million.
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