Pulling the plug on months of
failed workout negotiations, Bank of Nova Scotia has forced Concreate USL, Ltd.
and Concreate’s new owner TriWest Construction into receivership in Ontario Superior
Court under the administration of accounting firm Grant Thornton. The
receivership proceedings involve a steel fabricator owed $4.75 million on the
Strandherd-Armstrong Bridge in Ottawa, bonded by surety Guarantee Company of
North America, as well as numerous projects bonded by Travelers.
Work on the Strandherd-Armstrong
bridge and six bridges spanning the Queen Elizabeth Waterway has been stalled
by the court proceedings. The fabricator on the Strandherd-Armstrong bridge has
refused to ship any more steel to the site until it gets paid.
Guarantee Company of North America
holds bonds for over $23 million on Concreate/TriWest projects, and Travelers
holds more than $52 million in bonds on the stalled construction projects. Bank
of Nova Scotia lent $34 million to Concreate/Tri West in February, 2011 on the
strength of a capital infusion by TriWest when it bought Concreate in January
of the same year. According to court filings
by Travelers on April 10, 2012, Travelers claims the sale of Concreate to
TriWest was done in violation of Concreate’s indemnity agreements with
Travelers.
Concreate was founded in the 1970’s,
and moved to Ontario in 1983. During the last 15 years Concreate has expanded
its operations from shotcrete bridge repairs to include new bridge
construction, post tension water reservoirs, skateboard parks, and bobsled and
luge tracks. While the January 2011 sale to TriWest and the February, 2011 Bank
of Nova Scotia loan were supposed to improve Concreate’s financial strength,
receivership filings indicate TriWest took $15.4 million in writedowns on
construction contracts after the bank loan was made, causing Bank of Nova
Scotia to call the loan, and initiate the receivership when Concreate and
TriWest could not make the payment.
At this juncture, it seems
unlikely that Travelers, Bank of Nova Scotia, Guarantee Company of North
America and the unpaid subs and suppliers will sort out their differences in
time for any of the seven stalled bridge projects to meet their current
contractual completion dates.
