Supreme Court approves sale of insolvent St. Lawrence fluorspar mine
A judge has approved a plan to sell an insolvent St. Lawrence fluorspar mine, mill and marine terminal to a new owner, with a formal share purchase agreement to be formalized as early as Friday.
The purchaser plans to restart the operation, though a timeline has not been revealed.
Those owed money by Canada Fluorspar Inc., however, can expect "substantial" losses, or zero repayment on liabilities that total more than $140 million, according to Justice Alexander (Sandy) MacDonald of the Supreme Court of Newfoundland and Labrador.
MacDonald gave his seal of approval Tuesday afternoon to an application by insolvency monitor Grant Thornton for the sale of CFI's shares to a newly incorporated company through what's called a reverse vesting order.
In simple terms, it means the purchaser will acquire CFI's assets, including the licences and permits that allow the mine to operate, but not CFI's liabilities and creditor claims. The intent of such a transaction is to allow for a seamless restart of the mine.
MacDonald ordered that the name of the company and the details of the purchase agreement be sealed until the deal is finalized. The court was told that those involved with the purchase have no affiliation with Canada Fluorspar Inc.
The court heard that the purchaser intends to reopen the mine, which employed roughly 280 people when it ceased operations in February 2022 after it ran out of cash.
It was one of the largest private sector employers on the Burin Peninsula.
CFI owes roughly $95 million to several secured creditors, including nearly $20 million to the provincial government for a loan that was approved early 2017.
But MacDonald said secured creditors can expect "substantial" losses, while there's zero money for the $32 million owed to a long list of unsecured creditors, which includes companies throughout the province and beyond.
Most of the proceeds from the sale will be disbursed to secured creditors following a claims process that's expected to be approved in the fall.
In addition to the loan, the provincial government also contributed some $3.25 million to help fund the sales process. This money will be refunded to the province from the sale proceeds.
Grant Thornton's application for a sale approval was approved by MacDonald without any opposition from those attending the hearing.
Phil Clarke of Grant Thornton called Tuesday's outcome "the best of an unfortunate situation."
"[It's] not uncommon for unsecured creditors not to realize any results from insolvency proceedings," he said.
But he said there's a silver lining for the business community and those who previously worked at the mine.
"There's an opportunity for the rehiring of employees and for all these businesses to do business with somebody else."
