The selection was looking for funding a year before the pandemic

Already in April 2019 PwC, the company currently in charge of the financial recovery of the retirement home giant (RPA), had been commissioned by the Bank of Montreal and Investissement Québec (IQ) – the financial arm of the state of Quebec – to carry out due diligence ” in the context of potential funding”.

Why was the trial, which ran until April 2020, stopped?

“After a diligent review lasting several months, particularly due to incomplete or unavailable information, this funding has not materialized,” writes Christian Bourque, head of PwC’s restructuring department in Quebec who is leading the turnaround for Selection.

It is not the first time that the financial management of the company founded by the entrepreneur Réal Bouclin has been criticized. When placed under the protection of the Law on composition with creditors between companies (LACC), the lenders had estimated that the disorganization was generalized in this department.

Mr. Bourque’s initial report had not yet been made public. However, the sealing order for this document was reversed by the Quebec Superior Court earlier this week at the request of attorneys for The print. Some sensitive information, such as the value assigned to certain Selection resources, remains obscured.

This PwC report does not specify the amount requested by the Selection. The now-insolvent company blamed much of its debacle on the health crisis, but the filing shows there were problems before COVID-19 hit.

A sign of liquidity needs, Selection “was in discussions with a potential investor” between April 2019 and April 2020, according to the PwC report. The investor’s identity is not mentioned and information that would have given an idea of ​​the amount that could have been injected has been obscured.

“This investment never took place,” the report simply points out.

Sheltered until February 22nd

Asked to comment on the talks on the arrival of potential investors in recent years, Sélection replied by email that “several avenues” had been explored, but that “currently” efforts were being made to “successfully relaunch”.

Despite financial challenges dating back to before the pandemic, the owner and operator of RPA was able to benefit from support from the state of Quebec under the Program for Concerted Temporary Action for Enterprises (PACTE), established by the Legault government to provide funding of emergency to companies affected by the health crisis.

Quebec is exposed for $60 million as part of the ongoing restructuring at Selection following spring 2021 loan guarantees from IQ. This guarantee concerns the bank loan, which now reaches 272 million, obtained at the time by the company.

PwC’s first report provides a partial update on the finances of giant RPA. Thus, the company was “undercapitalised” and had invested more than $136 million in the “18 months ended June 30, 2022”.

This sum had been financed “100%” by loan or monetization of assets.

In the construction division alone, the net loss was $8 million for the six months ended June 30. As for the cash deficit, it amounted to 30 million.

On Wednesday, the Superior Court decided to extend until February 22 the period that allows Sélection to remain safe from its creditors. Mr. Bourque has already taken a series of measures to cut expenses. They should have decreased by about 14 million at the end of February.