John Risley’s CFFI strikes deal to sell assets to affiliate of US$1-billion creditor

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeFinanceNewsJohn Risley’s CFFI strikes deal to sell assets to affiliate of US$1-billion creditorHPS affiliate New Tide would acquire substantially all of the insolvent investment firm’s assets through a credit bidJohn Risley is one of Atlantic Canada’s most prominent business figures, known for building companies across seafood, energy and telecommunications. Photo by Keith Gosse/The Telegram filesJohn Risley’s insolvent investment firm has struck a deal that would see substantially all of its assets sold through a credit bid tied to more than US$1 billion in secured debt, according to new court documents.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountCFFI Ventures Inc. entered creditor protection in March owing roughly $1.4 billion, including about US$1.12 billion to New York-based HPS Investment Partners LLC.An asset purchase agreement dated Friday names New Tide Capital LP, an affiliate of HPS, as the purchaser and describes its offer as the “successful bid.” The deal still requires approval from the Nova Scotia Supreme Court, with a hearing scheduled for Sept. 17.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againThe agreement follows a court-supervised effort to find buyers for CFFI that failed to attract any formal notices of intent to bid by the July 21 deadline. Court-appointed monitor FTI Consulting Inc. subsequently terminated the sale process.Justice John Keith described the anticipated deal in letter last week as a credit bid by CFFI’s senior secured creditor, HPS, for “substantially all of the assets and undertaking of CFFI.”A credit bid allows a secured creditor to use debt it is owed to buy assets rather than paying the full purchase price in cash. Under the agreement, New Tide would take on CFFI’s debt to HPS as part of the purchase.A schedule to the agreement assigns about US$1.03 billion of that debt across the assets involved in the deal, although those amounts do not necessarily represent what the individual assets are worth. The agreement says the debt “continues to increase.”The proposed deal follows an earlier attempt to restructure CFFI that also involved HPS. When CFFI initially sought creditor protection in March under Nova Scotia’s Companies Act, it proposed transferring many of its assets to entities affiliated with HPS.But several creditors, including Risley’s long-time business associate Brendan Paddick and the Canada Revenue Agency, raised concerns about the company’s valuation assumptions, debt calculations and the structure of the proposed transaction.A fairness opinion prepared by Ernst & Young Global Ltd. estimated CFFI’s assets at about $367 million and concluded the original deal was reasonable because creditors would likely recover no more than that in a liquidation.Paddick is suing CFFI over an unpaid $23-million loan, while the CRA has claimed the company owes it roughly $333 million, a claim CFFI has disputed. New Tide would not take on Paddick’s claim or other unsecured debts, and the agreement does not say how much, if anything, those creditors could recover.There has also been a development in the CRA dispute.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.In his letter, Keith also said CRA counsel confirmed that the dispute over taxes allegedly owed by CFFI “has been resolved” and that a document confirming the resolution had been circulated. CFFI’s lawyer told the court he was not aware of the document, prompting Keith to direct the two sides to discuss the matter and update the court.The proposed sale would transfer much of CFFI’s wide-ranging investment portfolio to New Tide, including holdings in renewable fuels, marine services and skin care.But the fate of CFFI’s stake in Cormorant Utility Services Ltd. remains unresolved.Cormorant has its own secured debt with SFPC Quantum LP. CFFI has said about $28.5 million in principal remained outstanding as of May 31. The stake could still be transferred to New Tide if the debt is repaid or refinanced, Quantum agrees, or the court approves the transfer.There is also an unresolved dispute over artwork held by CFFI. Court filings indicate the company holds hundreds of pieces of artwork valued at approximately $8.1 million on its financial statements.Keith previously asked FTI Consulting to address questions involving certain CFFI transactions and assets, including the artwork. The proposed court order would allow Risley to continue claiming ownership of the disputed artwork, with the court ultimately deciding who owns it.Risley is one of Atlantic Canada’s most prominent business figures, known for building companies across seafood, energy and telecommunications. He co-founded Clearwater Seafoods Inc., which was sold in a deal valued at about $1 billion, and Columbus Communications, which sold for US$1.85 billion in 2014.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.