One year after closing a nearly C$200 million financing round to support “rapid expansion” in Canada and the United States, Montreal-based RenoRun is protecting itself from its creditors with a debt of approximately 50 million from dozens of creditors, the largest being Investissement Québec at 14 million.
Investissement Québec believed in the platform specializing in the sale and delivery of building materials to contractors by investing in it twice: the first time in the summer of 2021, the second in 2022, for a total of 14 million in equity and convertible notes.
Investissement Québec is also part of a group of investors who recently worked to find a solution to set up new financing.
“Unfortunately, the company and its investors have not been able to identify a formula that suits all parties,” Investissement Québec spokesperson Isabelle Fontaine told La Presse.
“Although we will not comment publicly on the details of the discussions that took place to come to this conclusion, we can nevertheless confirm that any investment or reinvestment decision is made with the objective of promoting the economic development of Quebec and sound stewardship of public funds,” she said.
Struggling financially, RenoRun filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act this week.
A document to this effect has just been presented to the Office of the Superintendent of Bankruptcy of the Department of Innovation, Science and Economic Development of Canada. Deloitte acts as trustee of the file.
It was not possible to speak to a member of RenoRun management on Wednesday and no one answered calls to the number made available to contractor-clients.
RenoRun, however, seemed to have the wind in its sails at the same time last year. The company announced a year ago that it had raised US$142 million in a financing round led by New York-based investment firm Tiger Global Management, with the participation of, among others, Investissement Québec, the Fund for Women in BDC Technology, Desjardins Capital, Nicola Wealth and Export Development Canada.
Existing RenoRun investors such as Inovia Capital, Real Ventures and Silicon Valley Bank also participated in this financing. Executives from Sonder and the founders of Goodfood Market acted as strategic investors in the deal.
Reached by La Presse, Chris Arsenault, of Inovia, did not wish to react. “We refrain from commenting so as not to interfere with the procedures in place,” he replied simply.
After laying off 12% of its workforce last summer, or 72 employees, management announced at the end of October the dismissal of 43% of its workforce, or 210 employees, including 80 in Quebec. RenoRun also fired 53 employees last month.
To explain the troubles, founder and CEO Eamonn O’Rourke told La Presse last fall that while the company had more than doubled its sales every year for the past five years, the business environment had “fundamentally” changed during the year 2022, referring to macroeconomic uncertainty.
He said he was trying to position the company for the “inevitable” recovery that would come once the uncertainty surrounding consumer spending dissipated.
Anticipating a recession, Eamonn O’Rourke estimated that the storm could last 12 to 24 months, that growth was no longer a priority and that RenoRun needed to reach profitability faster than expected.
Founded six years ago, RenoRun had developed a presence in six markets (Montreal, Toronto, Boston, Chicago, Philadelphia and Washington). Other markets were to be added. Listing on the stock exchange was part of his plans.
RenoRun had benefited from a tailwind during the pandemic as supply chain constraints and delays in the delivery of building materials gave contractors headaches. The company expected that the context would continue to present a challenge for entrepreneurs.
Silicon Valley Bank and the private investment firm Triple Point Capital are the only secured creditors, for sums of 2.7 million and 4 million respectively.
