Canadian locomotive firm insolvent
RailPower Technologies Corp., a Quebec company that makes hybrid train locomotives, is now under creditor protection after years of struggling to get its finances in order, the Toronto Globe and Mail reports.
The company, based in Brossard, just outside Montreal, hopes to restructure and stay in business. Right now, however, it doesn't have enough cash to meet its obligations.
A Quebec Superior Court judge granted court protection under the Companies' Creditors Arrangement Act yesterday afternoon. Its U.S. subsidiary also won similar protection from creditors.
The company's business is geared to helping North American railways clean up their 6,000 aging, and polluting, switching locomotives. RailPower rebuilds old engines by installing new, more efficient diesel motors, adding banks of rechargeable batteries.
In combination, the motors and batteries work like a hybrid car: The diesel motors run only when needed to keep the batteries charged, and the batteries run the engine.
But the company had a tough time getting enough orders to generate the cash it needed. Some operational setbacks - including a recall of its famous Green Goat locomotive because of possible engine fires - exacerbated the financial problems.
As far back as November, 2006, the company had just $3 million cash on hand and was beating the bushes for a new investor who would pump in some cash.
It found one, in the form of the Ontario Teachers' Pension Plan, which in late 2007 invested $35 million in the company. Last May, it invested another $20 million in the form of a convertible debenture. Now, Teachers is the largest creditor, and is counting on the restructuring to get RailPower back on track.
Teachers' spokeswoman Deborah Allan said in an interview yesterday that the pension fund is hopeful RailPower will eventually succeed. "Our preferred scenario is for the company to continue," she said. "We're talking to management and the board, and working towards a resolution with them."
It is too soon to say how that will be done, she said, but now "there's a critical review of what options are available."
The company, which also announced the departure of president and chief executive officer José Mathieu yesterday, said its normal day-to-day operations will continue without interruption.
The CCAA protection expires on March 6, but can be renewed. Ernst & Young is acting as the court-appointed monitor and is the company's financial adviser.
Richard Laliberté has been appointed chief restructuring officer. He joined RailPower in 2006 as vice-president of engineering, quality assurance and product service.
Contacted yesterday, Mr. Mathieu said he has signed an agreement with the company and is not permitted to comment on the circumstances of his departure.
Last week, the company laid off about one-third of its staff. Last fall, it postponed the completion of a new assembly plant in Saint-Jean-sur-Richelieu, Que., because of order delays caused by the economic slowdown.
RailPower, whose stock traded as high as $6.50 in mid-2006, has been under $1 for most of the past two years.
Yesterday the stocked closed at 5 cents, down 3 cents.
(This item appeared Feb. 5, 2009, in the Globe and Mail.)
February 5, 2009
If Conductors are in charge, why are they promoted to be Engineer???
Retired Triebfahrzeugführer. I am not a moderator.
