Heico to Buy Bankrupt Ivaco

Jason Sandefur

Insolvent Canadian fastener manufacturer and steelmaker Ivaco Inc. will sell its businesses for a total of CAD$375 million (U.S.$285 million) to Heico Cos. LLC, a Chicago-based holding company. The deal will pay creditors but leave shareholders empty handed. \
The sale, which includes fastener operations Infasco, Infasco Nut, Ingersoll Fasteners, Galvano, Vermont Fasteners and IFC Inc., is expected to close by the end of 2004 if approved by the Canadian bankruptcy court.
Ivaco has been shopping its fastener businesses to other companies since October 2003, a month after it filed for bankruptcy. Court filings indicate the company owed CAD$262 million in debt and CAD$178 million in unfunded pension liabilities when it sought protection.
High energy and scrap costs, as well as U.S. anti-dumping duties and the rising value of the Canadian dollar, had caused trouble for ailing Ivaco in recent years.
Heico will assume certain liabilities, which could reduce the amount of cash paid to creditors by up to CAD$100 million.
Ivaco operations include Canada”s largest rod mill, with annual capacity of 900,000 tons of wire rod; fabricated steel products, capable of producing about 350,000 of wire products and processed rod per year; and fastener operations with an annual capacity of 175,000 annually. Ivaco reported a CAD$200 million loss in 2003 on sales of CAD$775 million.
The Globe and Mail reported that Heico is expected to retain Ivaco”s nearly 2,500 employees spread through Canada and the U.S. Gone from the family-controlled company are former CEO Paul Ivanier and senior vice president Sidney Ivanier, who both reportedly quit during restructuring.
The Ivanier brothers received harsh criticism from investor Yves Beaudoin, who told the Toronto Star that the Ivaniers engaged in “questionable” practices.
“Even in the difficult years, (they) continued to pay themselves $5 million a year in salaries,” Beaudoin stated. “It”s a sad story, which ended badly for shareholders.”
Heico will retain current CEO Gordon Silverman, who received praise from Heico president El Roskovensky.
“I think current management has done a good job,” Roskovensky told the Globe and Mail. “They”re navigating their way through this process and the business is going along quite nicely.”
Roskovensky said Heico hopes to operate Ivaco companies as a stand-alone business.
Chicago-based Heico is controlled by financier Michael Heisley, who also owns the NBA”s Memphis Grizzlies. Heisley bought the team in 2000 when it was located in Toronto and moved it to Tennessee the next year.
Heico has controlling interest in wire manufacturers Davis Wire Corp. of Irwindale, CA, and National Standard Co. of Niles, MI, as well as ownership of telecommunications and plastics operations. �2004 FastenerNews.com