ROYAL BANK of CANADA Applicant
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Court File No. CV-19-00615270-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) BETWEEN: ROYAL BANK OF CANADA Applicant - and - DISTINCT INFRASTRUCTURE GROUP INC., DISTINCT INFRASTRUCTURE GROUP WEST INC., DISTINCTTECH INC., IVAC SERVICES INC., IVAC SERVICES WEST INC., and CROWN UTILITIES LTD. Respondents AFFIDAVIT OF ROXANA MANEA (Sworn December 5th, 2019) December 5, 2019 Thornton Grout Finnigan LLP Barristers and Solicitors 100 Wellington Street West Suite 3200 Toronto, Ontario M5K 1K7 Fax: 416-304-1313 D.J. Miller (LSO# 344393P) Tel: 416-304-0559 Email: [email protected] Rachel Bengino (LSO# 68348V) Tel: 416-304-1153 Email: [email protected] Lawyers for the Receiver Court File No. CV-19-00615270-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) BETWEEN: ROYAL BANK OF CANADA Applicant - and - DISTINCT INFRASTRUCTURE GROUP INC., DISTINCT INFRASTRUCTURE GROUP WEST INC., DISTINCTTECH INC., IVAC SERVICES INC., IVAC SERVICES WEST INC., and CROWN UTILITIES LTD. Respondents AFFIDAVIT OF ROXANA MANEA (Sworn December 5th, 2019) I, Roxana Manea, of the City of Pickering, in the Province of Ontario, MAKE OATH AND SAY AS FOLLOWS: 1. I am a law clerk with Thornton Grout Finnigan LLP (“TGF”), counsel to Royal Bank of Canada (“RBC”), the Applicant in the within proceedings and, as such, I have knowledge of the matters to which I depose herein. 2. The facts herein are within my personal knowledge or determined from the face of the documents attached and from the information and advice provided to me by Rachel Bengino, a lawyer with TGF. Where I have relied upon such information and advice, I believe it to be true. -2- Agreement”). Attached hereto and marked as Exhibit “A” is a copy of the Credit Agreement including certain amendments thereto. 3. As at February 21, 2019, the outstanding indebtedness owing by the Borrower and its subsidiaries under the Credit Agreement totals $53,383,640.78 (plus accrued and unpaid interest and expenses). 4. The indebtedness and other obligations of the Borrower under the Credit Agreement are guaranteed and secured by, among other agreements; (a) a general security agreement dated March 23, 2017, executed by, among others, the Bon’ower and iVac Services West Inc. (a successor (by way of amalgamation) to Mega Diesel Excavating Ltd. “iVac West”)) in favour of the Secured Lender (the “GSA”), a copy of which is attached hereto and marked as Exhibit “B”; and (b) a guarantee dated as of Mai'ch 23, 2017 and executed by, among others, the Borrower and iVac West in favour of the Secured Lender, a copy of which is attached hereto and marked as Exhibit “C”. 5. The security interests granted to the Secured Lender pursuant to the GSA are perfected by registration under the Alberta Personal Property Security Act. Attached hereto and marked respectively as Exhibits “D” and “E” is a copy of a Personal Property Registry Search Results Report in respect of each of the Borrower and iVac West with a currency date of February 26, 2019. 6. The collateral that is subject to the GSA includes, among other collateral, equipment of the Borrower and iVac West (such equipment includes the Subject Vehicles), and all proceeds therefrom. 7. In or about December 2018 the Borrower informed the Secured Lender that it and iVac West wished to place certain of their equipment (the “Subject Vehicles”) for sale (the “Auction”) with Ritche Bros. Auctioneers (Canada) Ltd. (the “Auctioneer”). A sale of equipment in this manner without the consent of the Secured Lender would constitute a breach of the Credit Agreement (see, for example, section 11.4.3 of the Credit -3- Agreement). Accordingly, the Borrower requested the Secured Lender’s consent to the Auction. 8. The Secured Lender was prepared to provide its consent to the Auction on condition that all net proceeds from the Auction be applied in permanent reduction of the term loan forming part of the Credit Facilities. 9. It was further agreed that the net proceeds would be applied against the indebtedness owing by the Borrower to the Secured Lender by way of a deposit of those proceeds into accounts maintained by the Borrower or its subsidiaries with the Secured Lender - which would initially reduce the indebtedness under the revolving facility and then be applied by RBC in permanent reduction of the term loan. 10. In connection with the Auction, the Auctioneer required that the Secured Lender execute its form of secured creditor confirmation letter. 11. In furtherance of its agreement to allow the Auction to proceed, the Secured Lender completed and signed the Auctioneer’s fomi of confirmation letter. A copy of email correspondence between RBC and the Borrower (redacted to conceal privileged or irrelevant information) regarding the terms of consent to the Auction and the application of the proceeds therefrom is attached hereto as Exhibit “F”. A copy of the Auctioneer confirmation letter signed by Andrew McLaughlin on behalf of the Secured Lender is attached hereto and marked as Exhibit “G”. 12. The Auctioneer’s form of confirmation letter required the selection by RBC of one of two declarations. I am advised by Andrew McLaughlin that, in selecting option 1, he intended the second part of that statement to apply - namely that “we have a valid security interest in the Equipment but do not wish to receive the proceeds from the sale thereof” 13. I am further advised by Andrew McLaughlin that (i) at the time he completed and executed the Auctioneer’s form, he was not aware of the claims asserted by the Plaintiffs, (ii) he did not intended to release or subordinate the Secured Lender’s security interest in the equipment or their proceeds in favour of the Plaintiffs or any other creditors of the Borrower or iVac West, and (iii) he understood and expected that the net proceeds would -4- be released by the Auctioneer to the Borrower or iVac West and deposited into the accounts of the Borrower or its subsidiaries, as agreed to amongst the Borrower and the Secured Lender. 14. I swear this affidavit in support of the application brought by the Defendants for an order, inter alia, directing that the monies held by the Auctioneer as proceeds from the sale of the Subject Vehicles be paid to the Secured Lender and applied to the secured indebtedness owing to the Secured Lender by the Defendants and/or their successors. SWORN BEFORE ME at Toronto, Ontario, ) STUART BROTWIAN EXHIBIT "F THIS IS EXHIBIT “F” referred to in the Affidavit of Gary Ivany sworn before me this 1st day of March, 2019 A Commissioner for Taking Affidavits STUART BROTWIAN From: William Nurnberger fmailto:[email protected]] Sent: 2018, December, 19 12:13 PM To: Ivany, Gary <garv.ivanv(5)rbc.com> Cc: Joe Lanni <ioe.ianni(a)diginc.ca>: Alex Agius <alex.agius(5)diginc.ca>: Du, Alicia <[email protected]>: O'Gorman, Philip <phiiip.ogorman(5)rbc.com>: Jay Vieira <[email protected]> Subject: RE: RBC/DIG Hi Gary, we accept the below statement and look forward to moving forward with you and your team. Thank you DfSTINCT William Nurnberger, Interim Chief Financial Officer & Vice President Corporate Development Distinct Infrastructure Group Corporate Office I 77 Beifield Road, Suite 102 I Toronto, ON M9W 1G6 0:416.675.6485! D: 587-583-8970 I C; 587-583-8970 | W: www.dioinc.ca TSXV: DUG Ail rights reserved This communication, including sttachrnents, is for lha exclusive, use of addressee as directed by DIG Iric and may contain proprietary, confidenliai and.'ot pnvileged information. If you are not the intended recipient, any use, copying, disclosure, dissemination or disthbution is strictly prohibited. If you are not the intended recipient, please notify the sender immediately by return e-mail, delete this communication and destroy all copies. PLEASE PRINT RESPONSIBLY From: Ivany, Gary fmailto:garv.ivanv(S)rbc.com1 Sent: December 19, 2018 9:34 AM To; William Nurnberger <William.NurnbergerfS)diginc.ca> Cc: Joe Lanni <[email protected]>: Alex Agius <[email protected]>: Du, Alicia <alicia.du(a)rbc.com>: O'Gorman, Philip <[email protected]> Subject: RBC/DIG William, you have advised us that Distinct Infrastructure Group Inc. ("DIGI") and/or its subsidiaries wish to dispose of certain assets with an aggregate fair market value in excess of $2,000,000. Such asset disposition will be a breach of 1 DIGTs covenant set forth in Section 11.4.3 of the credit agreement dated March 23, 2017 (as amended to the date hereof, the "Credit Agreement") between DIGI and Royal Bank of Canada ("RBC"). RBC hereby consents to the asset disposition on the strict condition that immediately upon such disposition DIGI shall make a voluntary prepayment of principal in an aggregate amount of at least $2 million towards its Term Loan (as defined in the Credit Agreement). This payment will be in addition to regularly scheduled payments, with no change to those payments. Failure to make such prepayment to the Term Loan as aforementioned shall result in an Event of Default under the Credit Agreement (as defined in the Credit Agreement) for which there shall be no grace period. Further, an additional payment towards the term loan will be re-assessed in January 2019. Please confirm your acceptance of the foregoing by reply email, and upon acceptance of which, we will forward our consent to Ritchie Bros. Gary Ivany | Senior Director, Special Loans & Advisory Services | Royal Bank of Canada 1 20 King Street \A/est, Toronto ON M5H 1C4 I T (416) 974-2189 !f you received this email in error, please advise the sender (by return email or otherwise) immediately. You have consented to receive the attached electronically at the above-noted email address; please retain a copy ofthis confirmation for future reference.