Furniture sources Shermag, Jaymar up for sale
Deadline for tender offers is July 10
Michael Knell -- Furniture Today, June 5, 2009
SHERBROOKE, Quebec — The court-appointed monitor overseeing the affairs of Shermag Inc. has begun a public tender process for the sale of the company's assets, including its two core businesses -- upholstery producer Jaymar and importer Shermag, which sells bedroom, dining room, juvenile and occasional furniture, as well as glider rockers.The two companies will be sold separately as "going concerns," according to Shermag COO Alex Adimari. Included in the Jaymar package is its 150,000-square-foot factory in Terrebonne, Quebec. The Shermag package includes its distribution center in Victoriaville, Quebec, as well as its head office and research and development center in Sherbrooke.
The company's former headquarters has been sold.
The non-core assets up for sale include all 11 of Shermag's now-idle factory buildings in Quebec and northern New Brunswick, two saw mills, all equipment and remaining inventory from its once domestically produced collections. Shermag is no longer manufacturing either case goods or glider rockers in Canada.
Adimari said the non-core assets can be sold off either individually or together.
"We are under no obligation to accept any offer," he said. "The goal is to get rid of the inactive assets for as much as we can - we need cash to pay our debts."
Shermag obtained approval for the tender process earlier today from the Québec Superior Court.
In a statement, Shermag said that its secured lender - Geosam Investments Limited - fully supports the tender process.
Geosam is the private investment company owned by activist investor George Armoyan. He is also chairman of Halifax, Nova Scotia-based Clarke Inc., Shermag's largest single shareholder.
"The management and the independent members of the board of directors of Shermag believe that the tender process is currently the best means through which Shermag can restructure its business," the statement said. "However, Shermag will continue to canvas any scenario available."
Interested parties should contact the Montreal office of RSM Richter, the court-appointed monitor. After filing a letter of intent and signing a confidentiality agreement, interested parties will have access to a virtual "data room," where they will be able to review Shermag's books.
Offers must be filed by July 10. Shermag is expected to inform the court of the results on July 24.
In a separate move, Geosam has launched an appeal of an earlier court decision barring it from taking over Shermag. The court rejected a motion from Shermag seeking permission to cancel all of its existing and outstanding shares and issue new shares to Geosam in consideration of the funds it was investing the company's restructuring.
According to the appeal documents, the court rejected Geosam's assertion that the existing shares have no value and simply can't be cancelled without compensation to their owners. However, an evaluation conducted by RSM Richter concluded the shares had a negative value.
It is likely that the tender process will be concluded before the appeal is heard.
While Shermag's future is likely to be determined over the coming weeks, Adimari said business for Jaymar and Shermag is carrying on as usual. "These events haven't really affected our customer base."
Shermag has been under court-ordered protection from its creditors under the Companies Creditor Arrangement Act since May 2008.
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thanks regard
eko priyono - 2009-6-6 18:15:25 EDT
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