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SRTX has received court approval to sell its assets to AYK International, despite opposition from at least one shareholder.
The Superior Court of Quebec approved the transaction in late February, according to court documents. SRTX spokesperson Eva Hartling said that the sale “represented the best possible outcome” for the company.
Talking Points
- The Superior Court of Quebec has approved AYK International’s proposed purchase of SRTX, the Montreal-based maker of rip-resistent Sheertex tights
- The sale comes after the company struggled to become profitable and risked insolvency
The Montreal-based firm, which makes what it says are rip-resistant tights best known under the Sheertex brand, launched a strategic review last October, exploring a possible sale, reorganization or other outcome as it struggled to stave off insolvency with profitability a distant goal. At the same time, SRTX temporarily laid off some of its staff. Sophie Boulanger, who had only started as CEO two months prior, also stepped down.
Boulanger left, the court said, during “tumultuous times” and “decided not to pursue the adventure” given the challenges faced by SRTX, which were “not exactly what she had signed up for.”
Through the review, SRTX determined the sale was the best path forward and asked the court to approve the deal in February. The decision surprised at least one shareholder who expressed “profound surprise” at the insolvency filing and the proposed deal, according to court documents. The shareholder, who is not named in the documents, told the court they would have considered an equity investment in SRTX if the opportunity had been afforded. The court’s approval addresses any claims made by shareholders, Hartling said.
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SRTX had raised US$40 million in equity in March of last year—a deal that was contingent on founder and then-CEO Katherine Homuth stepping down. At the time, insolvency was already a real possibility, with the company projecting it would run out of funds by April. SRTX had raised about $255 million in equity and debt since 2019, the court noted, and during the strategic review, asked its significant shareholders—including Export Development Canada, BDC, Investissement Québec and H&M—to consider providing further funding.
The court told the disgruntled shareholder it could ask for an adjournment of the hearing or contest the sale, but the shareholder stopped communicating with the courts or SRTX.
The deal closed in late February. Under the terms, AYK acquired all of SRTX’s equity, but not all of its assets and liabilities, including machinery, equipment and leases for two of its facilities.
After the proposal was made, SRTX had 30 employees. Seven were to be offered jobs with AYK.
