One of Barrie’s largest employers is urging customers not to alter their shopping plans, and its employees to remain calm, in light of misfortunes befallen its American parent.
InterTAN Canada Ltd., a wholly-owned subsidiary of US-based Circuit City Stores Inc. , today announced that it has been granted creditor protection by the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act.
InterTAN's application to seek creditor protection is a consequence of a voluntary petition for reorganization filed earlier today by Circuit City in the United States Bankruptcy Court for the Eastern District of Virginia in Richmond under Chapter 11 of the United States Bankruptcy Code.
Circuit City's filing has caused a termination of InterTAN's credit facilities. Circuit City's replacement financing is conditional upon, among other things, Court approval and the debtor-in-possession (DIP) lenders having security over all of InterTAN's assets. As a result, InterTAN is required to file for creditor protection under CCAA.
"We regret the necessity of this action and will be working diligently with our suppliers, employees and creditors to produce a successful holiday selling season," said Ron Cuthbertson, president of InterTAN, whose offices are located on Bayview Drive. InterTAN employs approximately 400 people in Barrie.
"The Source is a small-format specialty retailer with 772 stores across Canada, significant future growth potential and approximately $650 million of annual revenues. Our management is committed to working with our employees, dealers, joint-venture partners, vendors, landlords and other stakeholders to emerge from CCAA."
Subject to court approval, employees of The Source will continue to be paid and receive benefits in the normal course. Vendors and other business partners will be paid for goods and services provided after the filing in Canada.
"For customers, what is most important is that The Source remains open for business," said Cuthbertson.
"We are preparing for what we hope will be a busy holiday season. We are focused on providing our customers with the same expert electronics advice and wide range of products that they have come to expect from Canada's leading neighbourhood electronics retailer."
The Canadian business, which differs from Circuit City in that its stores are considerably smaller on average in terms of floor space, employ fewer staff and carry less inventory, recently delivered stable or improving performance, as noted by Circuit City in its quarterly disclosure.
For the second quarter ended Aug. 31, the Source had a profit of US $4.9 million, up 133 per cent from the same quarter a year earlier. Net sales were US $147.3 million, up 11.2 per cent from the second quarter of 2007.
