About 500 creditors are prohibited from pursuing money from the San Group of companies — owners of a value-added plant and lumber mills in Port Alberni — until at least Dec. 19, when the court-appointed monitor returns to the Supreme Court of B.C. in Vancouver.
The forestry venture, which consists of nearly 20 related businesses, filed for protection from creditors on Nov. 29. On that date, the monitor received permission to prepare for a sale and investment solicitation process but no details are public.
That protection expired on Monday and was renewed by Justice Michael Stephens until next week as the Deloitte Restructuring Inc. monitor works to unravel a complex financial picture around the Langley headquartered forestry venture.
The San Group and its related companies owe about $150 million to primary secured creditors and there is a “significant number” of additional secured and unsecured creditors on top of that, said the monitor’s first report dated Saturday. Additional money owed includes $22 million in stumpage fees to be paid to the province and secured by liens on company property.
Between 100 and 200 employees are out of work due to the San Group’s financial woes, Port Alberni Mayor Sherie Minions said last week.
A provincial community transition team has been set up in Port Alberni to support workers.
The city relies on the San Group as a key industrial taxpayer. Minions earlier said the San Group’s annual taxes were close to $1 million per year.
It appears the company has not paid its 2024 property taxes for its huge remanufacturing plant in the city. A freedom of information response to a resident on Nov. 8 said taxes for the plant were paid in 2023 but not in 2024.
Port Alberni’s 2024 financial plan anticipated receiving about $31 million in property taxes. Of that, residential taxes were to bring in the largest amount at $18.7 million. Major industrial use was expected to generate $5.8 million, light industry $990,542 and businesses $5.5 million.
The vast majority of creditor claims are unsecured. Secured creditors largely represent lending institutions, such as the Royal Bank of Canada, the Business Development Bank of Canada, and the Canadian Western Bank.
Total creditor claims are not yet complete. Unsecured creditors who submitted claims of $1,000 or more include the City of Port Alberni, the Port Alberni Port Authority, federal and provincial agencies, the Vancouver Fraser Port Authority and Kevin Somerville, vice-president of operations for the San Group.
Firms providing rental, environmental, excavating and trucking services, plus tugs, office supplies, forestry products, propane and concrete are also on the creditor lists. Some creditors have claims against more than one of the related companies.
Several concerns were highlighted by the monitor, including a $12.1-million insurance claim for the April fire at San Group’s Acorn Forest Products sawmill in Delta. The claim has been denied.
Another $1.9 million is claimed for initial business disruption as a result of the fire, as is $27.2 million for a property, building and equipment claim. Results of those two claims have not been revealed, the monitor said.
Further, there was a reported break-in about Dec. 4 in Port Alberni.
The monitor planned to visit the city to assess new security plans to protect assets.
Plus “there is a need for more accurate and timely information from the petitioners [the San Group companies],” the monitor said.
The monitor said the companies’ cash-flow forecast lacks supporting data, and information is not arriving in a timely way. This has limited the monitor’s ability to determine how reasonable the cash-flow picture is, raising a worry that more funding may be needed.
San Group companies experienced a 17 per cent drop in sales in the fiscal year 2023 from fiscal year 2022. This year’s sales are on track to run about 20 per cent below last year, the monitor said.
Operating costs for the companies included a reported net loss of $26.8 million this year on top of $21.4 million last year.
A large part of the 2024 loss was due to a company write down of about $20 million in the value of log and lumber inventory, said the monitor.
The company is on the hunt for $6 million worth of logs in booms that were swept away in storms that hit B.C. in mid-November, said the monitor, who is also seeking information about recovery efforts.
A draft report from the companies says that as of the end of September, its operating entities had a book value of about $189.6 million, and total liabilities of approximately $176.3 million.
Justice Stephens approved increasing the monitor’s administration charge to $500,000 from $300,000 partly because of the complexity of the situation.
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