During a Jan. 27 court hearing related to Laurentian University’s insolvency restructuring, the counsel representing one of the unions at the university voiced its concern related to what the union said is a lack of clarity in reports tracking LU’s cash flow.
The reports are put out by Ernst & Young, the firm that acts as the court-appointed monitor of Laurentian’s insolvency restructuring.
Danielle Stampley, counsel for LUSU, said specifically related to the millions in LU’s restructuring costs, people are left to add up all of these costs from report to report themselves, rather than a running total being readily available.
During the hearing, Chief Justice Geoffrey Morawetz encouraged Stampley to bring up these concerns with the monitor, Ernst & Young.
Given that there is no running total, we’ve gone through the cash flow analysis in four monitor’s reports by Ernst & Young, and added up LU’s restructuring costs from the dates Jan. 31, 2021 to Jan. 7, 2022, the time period for which information is currently available.
We came up with a grand total of $15.52 million.
At the same time, we added up the fees and interest for the $35 million debtor-in-possession (DIP) loan Laurentian took out as part of its insolvency restructuring under the Companies’ Creditors’ Arrangement Act (CCAA).
Laurentian paid $3.079 million in DIP loan fees and interest from Jan. 31, 2021 to Jan. 7, 2022.
The 10th report of the monitor, released last month, also included a cash flow forecast for the dates Jan. 8 to June 2, 2022.
It is projecting further restructuring costs of $7.849 million for that time period, and DIP loan costs of $0.397 million.
The DIP loan, which was previously through a private lender with an interest rate of 8.5 per cent, has been 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 will be based on the “province’s one-year cost of funds at the time of the advance.” For reference only, as of Jan. 12, that rate is 1.052 per cent.
The cash flow projection included in the 10th monitor’s report assumed that the previous DIP loan would be replaced by the DIP loan by the province as of Jan. 31.
