It’s business as usual at CFR Chemicals Inc., despite the financial troubles plaguing one of the Red Deer company’s two corporate shareholders.
That’s the message from officials with CFR Chemicals following last week’s news that Diversified Industries Ltd. (TSXV: DVS) — owner of a 50 per stake in CFR Chemicals — plans to file a proposal to its creditors under the Bankruptcy and Insolvency Act.
Diversified disclosed last Wednesday that it’s unable to meet its financial commitments and was discussing a potential restructuring with its creditors.
Gary Mahura, CFR Chemicals’ vice-president of business development, stressed on Monday that Diversified and CFR Chemicals are separate entities.
“There is Diversified; there is CFR,” he said. “And CFR is alive and well.”
Tomas Marshall, CFR Chemicals’ chief financial officer, said the company’s other owner is equity financing heavyweight McLean Capital Corporation of Vancouver. And it continues to back CFR Chemicals.
“They’re very clear that they will do whatever it takes for CFR to succeed.”
McLean Capital might even end up with a bigger stake in CFR Chemicals after Diversified’s restructuring is completed — likely in about four to six weeks.
“They really do see this as an opportunity to grow, and to grow with us,” said Brian McKay, CFR Chemicals’ chief operating officer.
Founded in 1996, CFR Chemicals distributes process and production chemicals — primarily to oil and gas companies.
Its production chemicals include proprietary specialty products, such as inhibited heat transfer fluid StaCool and hydrogen sulphide scavenger StaSweet.
“We’re not a mass generic production company on the production side,” said Mahura.
“We’re more a specialized niche market player when it comes to the production side.”
Diversified, a publicly traded company that focuses on bringing new and innovative products to the marketplace, acquired its interest in CFR Chemicals in 2007. It also relocated its head office from Sidney, B.C., to Red Deer.
The global recession hit Diversified hard, said Marshall.
“Diversified has continued to struggle with its development, and is at a point now where it is filing for creditor protection.”
With the energy sector on the rebound, the outlook for CFR Chemicals is positive, said McKay. He thinks an increased involvement of McLean Capital would strengthen its ability to capitalize on the turnaround.
In addition to its corporate head office in Red Deer, CFR Chemicals has tankage facilities west of Sylvan Lake at Kuusamo and a branch office at Grande Prairie. It also has a research and development lab and office in Edmonton, and distributors at Edson, Hinton, Fox Creek, Brooks, Vauxhall, Medicine Hat, Stettler, Viking, Taber and Fort St. John.
Darren Lamothe, CFR Chemicals’ longtime president and CEO, was relieved of his positions earlier this month. Board chairman Larry Malazdrewicz has been named interim president and CEO, and a permanent replacement is being sought, said Marshall.
He declined to elaborate on the circumstances surrounding Lamothe’s departure.