Shermag proposes issuing new shares to Geosam
Seeking new funds for restructuring
Furniture Today Staff -- Furniture Today, March 3, 2009
SHERBROOKE, Quebec — Wood furniture producer Shermag is proposing to cancel all of its outstanding stock shares and issue new shares to Geosam as a way to attract new funds into the company to finance its restructuring.
Last May, Shermag sought protection under the Companies' Creditors Arrangement Act (CCAA) - the equivalent of Chapter 11 in the United States.
The company will submit the motion to a bankruptcy court on Wednesday along with other motions for relief, a press release said.
Shermag plans to put forward a restructuring plan soon, it said.
Geosam acquired the company's credit facilities from Wachovia Finance Corp. Canada and has funded Shermag's operations and restructuring from bankruptcy.
Geosam is controlled by George Armoyan, who also is president and CEO of Clarke Inc., a Halifax, Nova Scotia-based investment firm that holds about 20% of Shermag's common shares.
The press release said the company presently has 241 employees. Shermag produces bedroom, dining room and occasional furniture.
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