Unsecured loan to Valeo Pharma: Quebec could lose more than $10 million

More than 10 million dollars loaned by Quebec to Valeo Pharma are at risk, while the supplier of specialized pharmaceutical products has just taken shelter from its creditors.

Under the protection of the Companies’ Creditors Arrangement Act (LACC), the Quebec company will try to attract investors or buyers for its assets. This process is overseen by Ernst & Young, which acts as controller.

For several months, Valeo Pharma has not been able to generate enough income to replenish its dwindling coffers and repay its numerous loans.

A “strategic review” process was therefore initiated in December 2023, but this did not result in a transaction to resolve the company’s liquidity problems.

Loan without collateral

Result: Valeo’s debts are today almost insurmountable. In total, the company owes $95.2 million to creditors, including $33.3 million to Sagard Healthcare Partners, a division of Power Corporation.

The company which specializes in the marketing of generic drugs and hospital products also owes $10.4 million to Investissement Québec. As it is a debenture, an unsecured loan, this money will simply be lost if Valeo cannot get its head above water.

In total, Investissement Québec paid $12 million to Valeo Pharma, including $10 million in loan and $2 million in equity. “It is still too early to determine whether or not Investissement Québec will recover the amounts loaned,” said the organization’s media and government affairs director, Isabelle Fontaine, in an email to Journal.

Restructuring

In hot water, Valeo nevertheless intends to “continue its activities during the restructuring process”, according to a press release published a few days ago. At the time of writing, company management had not responded to requests from Journalfor an interview.

For now, the company has secured interim financing from its main lender to keep it on its feet during the restructuring.

“While this is a difficult time for the Company, we remain committed to the business and, with the support of our senior lender, we believe the Company’s business can emerge from the CCAA proceedings more strong and more sustainable,” said Valeo Pharma CEO Al Moghaddam in a press release.