A major supplier of RONA and BMR finds itself in a precarious situation

A major Quebec maker of kitchen and bathroom cabinets finds itself on the verge of bankruptcy after an acquisition goes awry and hardware retailers RONA, BMR and Patrick Morin reduce their orders.

The company in question, Ébénisterie St-Urbain (EBSU), employs approximately 140 people in Salaberry-de-Valleyfield. Its products are sold in nearly 1,000 stores in Canada.

“Despite strong growth over the years, EBSU has encountered liquidity problems in recent months, mainly due to a significant temporary drop in orders from its major customers, which are retailers Rona, Renault Depot, Louise Canada, BMR and Patrick Morin,” we read in a document that was done. He filed it on May 11 in the Supreme Court.

Rona alone reduced its purchases of EBSU by 27% in late 2022 and early 2023, leaving a $13 million hole in the company’s revenue, the product was reported by the trustee in charge of the file, Dominic Deslands of accounting firm Raymond Chabot.

The result: EBSU posted a loss of more than $1.5 million last year while posting a net profit of nearly $500,000 the year before.

When asked to comment on the situation, Rona confirmed that she had not cut off supplies to EBSU and that she had “excellent relations” with this “key supplier”.

“Our backlog with EBSU fluctuates depending on the time of year, consumer demand and ongoing promotions. These fluctuations are not unusual and are repeated every year. 2022 was no exception,” he said. register RONA spokeswoman, Valerie Gonzalo.

“Currently, our order volume with EBSU is very high,” she added.

It should be noted that just a few months ago, RONA (formerly Lowe’s Canada) named EBSU among its “Supplier of the Year”.

“We have effectively reduced our orders with this resource over the past year. This decrease is explained in particular by the significant slowdown in housing construction in Quebec, which inevitably affects demand,” BMR spokesman Cavin Delarospell said.

As if that weren’t enough, the 2021 Ontario acquisition also dealt a severe blow to the finances of the company, which was founded by Michel Boucher in 1981 and is now run by the latter’s son, Napoleon.

Image from LinkedIn

Napoleon Boucher, President of Ébénisterie St-Urbain, a company founded in 1981 by his father, Michel.

Three months after Woodlore was purchased by EBSU, the acquiring company lost its largest customer, which accounted for 40% of its sales, or nearly $20 million. At the time the acquisition closed, EBSU was unaware that the client was suing Woodlore for “contractual default,” says a document drafted by the law firm McCarthy Tetro.

EBSU is now collapsing under over $61 million in debt. The company owes $3.2 million to the government of Quebec, $4.6 million to the Business Development Bank of Canada, $2.5 million to the federal government, $25 million to HSBC, $7 million to Woodlore’s previous owner, William Phillips, and more than $12 million. to his suppliers.

Image from LinkedIn

In July 2022, the Minister of Economy, Pierre Fitzgibbon (left), and Claude Reid, MP for CAQ, visited EBSU facilities in the company of the company’s president, Napoleon Boucher.

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To cut costs, the company is laying off 79 of its 200 employees in Ontario, Napoleon Boucher told The New York Times. register. No Quebec employees have been laid off yet.

EBSU is currently looking for financial partners to recapitalize. It can also sell some or all of its assets.

“The leaders are working hard to complete a restructuring that benefits all parties,” said Mr. Boucher.

He specified that the company could count on the support of its “major customers”, including RONA.