iPico Inc (CVE:RFD) (PINK:IPIFF) stock collapsed after the company filed a proposal to its creditors, requesting to allow reorganization of their debts and capital structure.
Investors saw 80% loss of value as the market opened today. The stock price instantly hit a new 52-week low as trading began. The collapse was driven by panic selling, and the odds of iPico going bankrupt are forcing even more selling.
The company is in negotiations to get a new loan facility from Brookfield Asset Management Inc. The latter is a major holder of Series C Secured Debentures of iPico. Even if the company gets the loan facility and avoids going bankrupt for the time being, they will have to continue operations as a subsidiary of Brookfield.
The company will need the approval from its creditors and the Ontario Superior Court of Justice to establish an interim loan facility. The proceeds would allow them to carry out business activities while the court is in process.
Three officers have already resigned from the board of directors.
This might very well be the end of the story for iPico. The proceeds from the new loan facility would only help them survive in short term and the creditors will have to be dealt with eventually. Their business model was ineffective, so the odds of successful reorganization are very slim.
Business operations provided rapidly increasing losses for the past five years, forcing debt financings which have in turn worsened the situation.
