Timminco Limited (TSX:TIM) has been granted creditor protection under the Companies' Creditors Arrangement Act until February 2, 2012 by the Ontario Superior Court of Justice. Timminco produces silicon metal for the chemical, aluminum and electronics/solar industries through its 51%-owned production partnership with Dow Corning, known as Québec Silicon. Timminco is also a producer of solar grade silicon for the solar photovoltaic energy industry, through Timminco Solar, a division of its wholly owned subsidiary, Bécancour Silicon. In their filing for CCAA protection, Timminco and Bécancour Silicon, are referred to jointly as “The Timminco Entities.”
In a release posted on its corporate website, Timminco said its liquidity situation has deteriorated as a result of various factors, including reduced cash flows from silicon metal operations as well as developments in the solar market that have delayed a restart of commercial scale production at Timminco Solar, which makes equipment for the solar power industry. As a result, Timminco has experienced restrictions in the availability of funding under its existing credit facilities.
In an affidavit to the court, Peter Kalins, President, General Counsel and Corporate Secretary, explained that the “Timminco Entities are facing severe liquidity issues as a result of, among other things, low profit margin realized on their silicon metal sales due to a high volume long-term supply contract at below market prices, a severe decrease in the demand and market price for solar grade silicon as a result of a collapse in the polysilicon market and overall solar market, failure to recoup capital expenditures incurred in connection with development of solar grade operations and the inability to secure additional funding.”
"The Timminco Entities are also facing significant environmental remediation legacy cost and financial costs related to large outstanding debts" from discontinued magnesium operations, he noted.
Kalins said CCAA protection would enable the companies to continue operating “while giving them the necessary time to consult with their stakeholders regarding the future of their business operations and structure.”
Québec Silicon Limited Partnership, which is a production partnership that produces silicon metal for Bécancour Silicon and Dow Corning, has not applied for creditor protection under CCAA and is not part of these proceedings.
FTI Consulting Canada Inc. has been appointed as monitor in the CCAA proceedings.