Court rejects bid by Geosam to take over Shermag
Furniture producer asks for extension of bankruptcy protection
Michael Knell -- Furniture Today, April 1, 2009
SHERBROOKE, Quebec — The Superior Court of Québec has rejected a bid by Geosam Investments Ltd. to take over full-line furniture producer and importer Shermag.
Shermag will seek an extension of its court-ordered bankruptcy protection at a court hearing this Friday. Shermag sought protection under the Companies Creditors Arrangement Act in May of last year.
Geosam's president, George Armoyan, resigned from Shermag's board of directors after the court's decision on the takeover bid was made public.
In March, Shermag sought the court's permission to cancel all of its existing and outstanding shares and issue new shares to Geosam in consideration of the funds it would invest in a restructuring plan. This would have given the Toronto-based investment firm total control of Shermag.
Geosam acquired Shermag's credit facilities from Wachovia Finance Corp. (Canada) in July of 2008 and, since that time, has funded Shermag's business operations and its restructuring process.
Armoyan, the owner of Geosam and the largest single shareholder in Shermag, was appointed to Shermag's board in mid-2007 to replace then-president and CEO Jeff Casselman. Armoyan also is executive chairman of Clarke Inc., a holding and investment company.
In a statement, Shermag said Geosam "fully supports the company and continues to work closely with management to conclude Shermag's restructuring process as quickly as possible. Shermag will make known the next steps of its restructuring process in the near future."
Headquartered here, Shermag has 229 active employees.