Harbour Grace shipyard enters creditor protection as owners face financial headwinds
Harbour Grace Ocean Enterprises is $16M in debt, with nearly 60 jobs on the line
One of Newfoundland and Labrador's largest shipyards, Harbour Grace Ocean Enterprises, has been granted court protection from its creditors as it struggles with a serious cash flow problem.
The company is nearly $16 million in debt, and creditors have been demanding payment.
Last week, the Supreme Court of Newfoundland and Labrador approved an order that temporarily protects the company from its creditors as it looks for a way forward. The court also appointed professional services firm PricewaterhouseCoopers to monitor the company.
The shipyard employs 56 full-time employees and is described in court documents as "one of the largest marine vessel, repair, refit and construction businesses in Eastern Canada."
The company plans to return to court next week to seek an extended stay of proceedings under the Companies' Creditors Arrangement Act.
In the short term, the company will pay the bills through what's called a debtor-in-possession loan of $255,000 from the shipyard's majority owner, Gray Enterprises Limited, which is owned by Kevin English.
According to court documents, the shipyard's revenues were up 34 per cent to more than $10 million last year, but profits plummeted by 33 per cent.
The company is blaming a slowdown in the fishing industry and the rising cost of doing business, including fixed-price contracts that "did not protect the applicants from inflation or the risk associated with delays in critical supplies."
The documents indicate the company has a serious cash flow problem and is struggling to meet payroll and utility costs.
In its application to the court, PricewaterhouseCoopers said creditor protection would provide breathing room for Harbour Grace Ocean Enterprises to develop a restructuring plan and search out a new buyer or investor.
Paul Lannon, general manager of Harbour Grace Ocean Enterprises, could not be reached for comment.
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