Insolvent Springer Aerospace should be sold by April

A Sault-area aerospace firm hopes to emerge from insolvency under the Companies’ Creditors Arrangement Act through the sale of the company by April.

Springer, an aircraft maintenance company in Echo Bay, has been open since 1972 and employs 100 people.

It occupies about 210 acres and includes three hangers and an airport that includes a main runway that is large enough to accommodate Boeing 737s for landing and takeoff, according to court documents filed under the CCAA process.

Like a lot of businesses, it was hard hit by the COVID-19 pandemic. In particular, the company had gone through a major expansion just before the pandemic hit.

With the aviation industry shut down, revenues tanked and the company’s inability to make their debt payments alarmed Caisse Desjardins Ontario Credit Union Inc., the company’s primary lender.

In addition, the court documents said financial problems were also caused by “operational inefficiencies,” rapid expansion without adequate planning and high levels of staff turnover, including in senior management.

The outstanding debt was $5.7 million by July 2022. By November, when it made the CCAA filing, the company had just $1,400 in its bank account.

It has since accessed operating loans (known as DIP financing) of $600,000 to allow it to continue operating through the first stage of the CCAA process. The company is expected to draw on a total of $820,000 in DIP loans as the process proceeds.

In court documents dated Dec. 19, the company said it is pursuing what’s known as a sale and investment solicitation process (SISP).

That means the assets of the company will be marketed to prospective buyers. The sale could take the form of a restructuring, refinancing or complete sale of the company’s assets, including the Echo Bay headquarters.

In January, the company will have to complete a list of potential bidders, publish a notice of the sale in industry publications, issue a news release detailing the sale and prepare a “teaser letter” inviting companies to submit bids.

Companies that show interest have to sign a non-disclosure agreement before gaining access to the company’s financial details.

Marketing materials for the sale will be finalized in January, with the first bid deadline set for Feb. 3. Companies will have until March 7 to conduct due diligence, with a successful bidder to be chosen March 13.

The courts will approve the sale by March 27, with the whole process being finalized by April 3.