The tally for restructuring costs over the course of Laurentian University’s insolvency is now up to $26.1 million.
That’s according to cash flow information in reports put out by the firm Ernst & Young, including the latest report put out Sept. 28.
A running total of restructuring costs is not presented in the report, but the number can be obtained by adding up the totals in six separate reports over the course of Laurentian’s insolvency.
The Sudbury school declared insolvency and applied for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA) on Feb. 1, 2021. Since that time, it has undergone restructuring, which has included mass layoffs and program cuts.
However, that restructuring has come at a hefty cost, as the reports referenced above reveal.
The university spent $5.2 million on restructuring between May 7 and Sept. 16, 2022, according to the latest report by Ernst & Young, which is the firm acting as the court-appointed monitor of Laurentian’s insolvency restructuring.
Projections from last spring predicted Laurentian would spend $7.3 million on restructuring costs during that period of time.
In terms of interest and other fees on the $35 million debtor-in-possession (DIP) loan Laurentian took out to backstop its finances during its restructuring, the university spent another $124,000 in that category from May 7 to Sept. 16 (the forecast was $123,000).
That means Laurentian has now paid around $3.5 million in DIP loan interest and fees.
The DIP loan, which was previously through a private lender with an interest rate of 8.5 per cent, was replaced as of Jan. 31 with one from the Ontario Ministry of Colleges and Universities at a much lower interest rate.
Specifically, this DIP loan agreement interest rate is based on the “province’s one-year cost of funds at the time of the advance.”
The latest monitor’s report also includes a cash flow forecast for the dates of Sept. 17 to Dec. 2, 2022, predicting another $5.6 million in restructuring costs during that time period, as well as another $92,000 in DIP fees and interest.
The end of Laurentian’s journey under the CCAA is now in sight.
On Sept. 14, the university’s creditors voted narrowly in favour of Laurentian University’s plan of arrangement, allowing Laurentian to clear a major hurdle to finally being able to exit creditor protection.
A plan of arrangement is essentially a plan put forward by an insolvent organization to pay out its creditors, and it must be approved by these creditors.
Laurentian’s creditors have been told to expect about a 14 to 24 per cent recovery on what they’re owed within three years.
The university is back in court Oct. 5 to seek a “sanction order motion” to approve the plan of arrangement, authorize its implementation and release creditors’ claims against the university.
It would also terminate the stay of proceedings protecting Laurentian against its creditors as of the implementation of the plan of arrangement.
Laurentian plans to ask for creditor protection to be extended until Nov. 30 as it implements its debt plan.
— Sudbury.com
