Canadian cannabis producer Eve & Co Incorporated (TSXV: EVE) (OTCQX: EEVVF) is making last-ditch efforts to stay in business.
On Friday, the company said it’s applying for creditor protection from the Ontario Superior Court, after receiving approval from its directors and “careful consideration of all available alternatives.”
Relatedly, directors Ravi Sood and Jeanette VanderMarel both resigned this week.
Eve & Co says the initial order being sought includes a stay of proceedings in favour of the company, approval of a debtor-in-possession loan and appointment of BDO Canada Limited as company monitor.
The stay of proceedings would allow the firm to conduct a sale and investment solicitation process, that sees it exit from the creditor protection as a going concern.
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“The company is confident that the protection afforded by the [Companies’ Creditors Arrangement Act] will be sufficient to allow the Eve Group to address its liquidity issues and stabilize operations,” reads a statement.
If the initial order is granted, the firm says it will operate normally throughout the creditor protection and solicitation process.
In order to fund the proceedings and other short-term working capital requirements, the company says it’s executed a term sheet with Deans Knight Capital Management Ltd., on behalf of its DIP lender clients, where the lender will give a $2.2-million DIP loan given that the court approves the order.
According to Eve & Co’s third-quarter 2021 financial filings, net loss for the three months ended Sept. 30 was $298,258. The company has a cash position of $289,000 and a working capital deficit of $15.4 million.