CHARLOTTETOWN, P.E.I. - The company in charge of the Diversified Metal Engineering (DME) receivership is negotiating with a bidder to acquire the Charlottetown business, according to court documents.
On Jan. 18, the receivers – Alvarez and Marshal – released its first report to the court detailing its activities and the sale process since DME went into receivership Nov. 26.
The report doesn’t identify the source of the Charlottetown bid, but does say it was “superior” compared to other bids because of the “purchase price, closing risk, available financing and employment opportunities for retained and former employees.”
On Jan. 10-11, the receiver entered into an exclusivity period to negotiate an asset purchase agreement for DME Charlottetown.
The receiver says the court will be updated on the negotiations “as information becomes available or at the time the receiver seeks court approval for the sale transaction.”
The DME Group was operated as three Canadian divisions — DME Charlottetown, the Abbotsford, B.C. plant and Atlantic Systems Manufacturing (ASM), which also operated in Charlottetown.
As of Nov. 26, about 263 people worked in the three divisions, including 150 with DME Charlottetown. About 50 staff were retained at DME Charlottetown to continue manufacturing operations related to brewing systems with customers who reached sales agreements with the receiver.
The receiver set Jan. 7 as the deadline for bids but accepted one additional bid for DME Charlottetown on Jan. 9.
Overall, 16 bids were made to the receiver, which included three bids for the Charlottetown business, four for ASM’s assets and nine bids that involved liquidation of the Abbotsford plant or all of DME’s assets.
The Charlottetown bids were submitted as a non-binding letter of intent.
The receiver is also negotiating an asset purchase agreement for ASM with a bidder.
An auction and liquidation services agreement with respect to the Abbotsford plant has already been finalized with Infinity Asset Solutions Inc. and Joiner Sales Corp. That agreement is subject to court approval, and the liquidation sale is expected to be completed by March 31, according to the report.
The receiver was contacted by 111 parties inquiring about the sale process.
Other court documents indicated that DME owed the Royal Bank of Canada (the secured creditor) $18.1 million while numerous unsecured creditors were owed $27 million.
The value of DME’s assets were estimated at $71.7 million.