Canadian Underwriter

Vector sells subs to pay debt; trading ceases

June 3, 2004   by Canadian Underwriter

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Trading will cease in shares of Vector Intermediaries as the company faces up to an insurmountable financial crisis.
In a press release, the broker consolidator says it has sold the assets of Bow Valley Insurance Services Ltd. and Saskatoon Agencies Inc., but will still face a shortfall in meeting obligations to its debtors.
Subordinated lenders have demanded payment of more than $20 million plus interest owed under the company’s subordinated credit facility. The company already faces a $6.7 million debt to its senior lenders, but now says efforts to restructure its debt have failed.
The brokerage sales, which were conducted through a receiver, should bring in about $12.9 million. However, once senior lenders are paid off and the remaining proceeds used to repay subordinated debt, a $15.5 million shortfall remains, and the company says existing assets (which includes three Alberta-based brokerages) will not be sufficient to generate this amount, thus making its shares essentially valueless.
Vector has been in a tailspin for some time, with all but on of its directors resigning in 2003, and the Alberta Securities Commission ceasing trading of its shares last summer. The sole remaining director has resigned effective immediately.Vector says the TSX has threatened to delist its shares if outstanding fees are not paid to the exchange, but Vector says it is not in a financial position to pay the fees. As well, the company has not filed financial results since late 2002.
Bow Valley and Saskatoon Agencies have been sold as going concerns, the release notes, with one being purchased in a management buyout.

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