A petition by BioAmber for protection under Canada’s Companies’ Creditors Arrangement Act has been granted by the Superior Court of Quebec.

An order issued by the court in late May provides for an initial stay of proceedings until June 22 and appointed PricewaterhouseCoopers as monitor of the company’s business and financial affairs.

BioAmber, a company headquartered in Montreal, opened its first commercial-scale plant in Sarnia in 2015.

In May, the company announced it had filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code and that its two Canadian subsidiaries, BioAmber Sarnia and BioAmber Canada, were seeking protection under Canada’s Bankruptcy and Insolvency Act “with a view to strengthen the company’s financial health and solidify its long-term business prospects.”

In its motion to the Canadian court, the company said it is “faced with a liquidity crisis resulting principally from a sales cycle longer than anticipated since the beginnings of commercial operations” in 2015, as well as “the inability to raise capital on the public markets as a result of its recent delisting from the New York Stock Exchange and Toronto Stock Exchange.”

BioAmber said the relief sought from the court is necessary to reach an agreement with its creditors “and will notably allow for the preservation of approximately 88 jobs.”

The motion says 73 of the company’s employees are in Canada, including 10 based in Quebec.

Along with a head office in Montreal and a production site in Sarnia, the company has offices and laboratory space in Minnesota.

The employees of BioAmber Sarnia voted recently to unionize and join Unifor but the “unionization process has not be completed,” the motion says.

BioAmber attracted federal and provincial funding to help it finance construction of its $140-million plant in Sarnia where makes the building block chemical, succinic acid, from corn syrup.

BioAmber was an early success of efforts by officials in Sarnia to attract bio-chemical companies alongside its existing petrochemical manufacturers and refineries.

According to its motion, the company estimated it had outstanding “non-contingent” liabilities of approximately $101.7 million, including loans from the provincial and federal governments, and the Sarnia-based Sustainable Chemistry Alliance.

A report by the monitor notes that since operations began in 2015, Bioamber has “accumulated significant losses of approximately $320 million, which ultimately led to its insolvency.”

Challenges the company faced include the relatively low price of petroleum used as the raw material for its competitors’ succinic acid.

Prices for those competing projects were near 10-year lows at the time the Sarnia plant started up in 2015, the company said.

A report by the monitor said the Sarnia plant has only been running at 25 per cent capacity.

“As such, it has been unable to generate sufficient operating profits to cover fixed costs during these initial startup years.”

The motion states the company has estimated $8 million to $10 million in additional financing will be needed over the next four to six months to continue operating the Sarnia plant and engage in a sales and investor solicitation process “with the ultimate goal of finding a financial or strategic buyer for the petitioner’s assets and business as a going concern.”

It said the company plans to continue discussions with interested leaders for interim financing to continue operations during that period.

The monitor’s report said that if interim financing is not obtained, the company will have no choice but to cease operations.

BioAmber’s motion said the company’s outside advisors estimated sale of its assets to a “strategic or financial investor will realize approximately twice the value for creditors and other stakeholders as compared to a forced liquidation.”

The court’s initial order, and other documents related to the company’s application, can be found online at www.pwc.com/ca/bioamber.

 

pmorden@postmedia.com

 

 





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