Wayland Group (CSE: WAYL) announced this evening that it has sought creditor protection for two of its subsidiaries, Maricann Inc and NanoLeaf Technologies. The firm has been granted an order by the Ontario Superior Court of Justice under the Companies Creditor Arrangement Act, also known as CCAA.
Following the granting of the order, under the CCAA, a stay of proceedings is issued for all legal cases that Wayland Group and certain of its subsidiaries are currently involved in. PricewaterhouseCoopers has been appointed as monitor of the firm as a result.
Wayland Group has identified that it sought the protection of the CCAA as a short term measure to attempt to secure financing or restructuring arrangements.
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The move towards acquiring creditor protection by Wayland Group, while not disclosed by the firm, is believed to be in relation to a secured convertible debenture financing that the issuer conducted in 2017. At the time, Maricann, now Wayland Group, raised $31.0 million via secured convertible debt that contained an interest rate of 9% and was for a term of three years. The financing was indicated to be for the purpose of acquiring NanoLeaf Technologies, the company behind VESIsorb. Due to the nature of the creditor protection, it is believed that Wayland may have defaulted on required interest payments for the debt.
Within Wayland’s last financials filed November 28, 2018, there was outstanding principal remaining to the tune of $21.4 million on those debentures.
With the equity halted since May 7, 2019 due to the firm not filing financials, debt holders have had little reason to convert their secured debt to equity. As a result, it appears that Wayland has now defaulted on the debt due to an inability to pay.
It is unclear what position this leaves the previously announced class action lawsuit against the firm in. While the CCAA introduces a stay to all legal proceedings against Wayland Group, there are instances in the past wherein the courts have allowed class action lawsuits to continue in instances of alleged fraud. If the firm is unable to find appropriate financing however, there may be little left for the class action members to secure.
Wayland Group remains halted due to not filing its financial statements for the last four quarters.
Information for this analysis was found via Sedar and Wayland Group. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
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