Rural internet service provider Xplore granted creditor protection

Résumé détaillé

Telecom company facing ‘looming liquidity crisis,’ as per legal filings

Rural internet service provider Xplore Inc. says it is insolvent and has been granted creditor protection while it aims to shore up its business by selling assets or restructuring.

The telecom company is facing a “looming liquidity crisis” and in recent months has missed two interest payments totalling more than $8.5-million, according to legal filings.

Despite efforts to work with its majority shareholders and lenders, the company said it has so far been unable to reach a recapitalization agreement that would allow it to carry out its business plan.

Before the court approval, the company had been “within days” of exhausting its limited remaining liquidity and would have been unable to make critical business payments, said William Aziz, serving as the company’s chief restructuring officer, in legal submissions.

Xplore’s situation is one example of the difficult conditions for smaller operators in Canada’s telecom sector, which in recent years has seen major consolidation of independent internet service providers.

The initial stay of proceedings, granted Wednesday by the Ontario Superior Court under the Companies’ Creditors Arrangement Act, will “stabilize and preserve the value” of the company and provide it with “necessary breathing room” as it seeks to find more sources of cash within the business.

It also grants the company access to some initial funding through a bridge loan – a short-term loan to cover a temporary funding gap – with creditors.

The telecom company has approximately 1,100 employees and provides internet service to hundreds of thousands of customers in rural areas across Canada. It said in a press release on Wednesday night that it will continue to serve customers and operate its networks.

Aside from Elon Musk’s Starlink, Xplore was the only company to bid on an Ontario government contract to provide satellite connectivity to rural communities.

Début de l'article, extrait de The Globe and Mail (Report on Business). Pour lire la suite, ouvrez l'article chez le média.