No Hollywood Ending for Timminco, files for Creditor Protection

Just three and a half years ago, it seemed out of the realm of possibility. Toronto based Timminco (TSX:TIM), once the talk of the TSX, today filed for creditor protection.

The company issued a statement today that said:

“Timminco Ltd., after consideration of the available alternatives, has determined that it is in the best interests of the stakeholders of Timminco and its wholly-owned subsidiary, Becancour Silicon Inc. (“Becancour Silicon” and, together with Timminco, the “Company”) for the Company to commence proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”).”

Has Canada seen a more compact and dramatic rags-to riches-to rags story than that of Timminco? The spectacular rise and fall of the Toronto based solar-silicon and silicon metal producer seems to be torn from the pages of a Hollywood script or Broadway musical. In late 2006, Timminco shares were worth pennies, closing that year at $.30. The stock hit nearly $34 in mid-2008.

In between was a time when the company claimed it had developed a new process to purify silicon for use in solar panels. If they were right, investors surmised, the ramifications were absolutely massive.On the other side were those who felt the technology Timminco claimed to have invented was too good to be true, a belief that was no doubt furthered by the fact that Timminco was extremely secretive about the process and even its customers. Each side had its champions; in April of 2008, Ravi Sood of Lawrence Asset Management (now Navina Asset Management Inc) appeared on BNN, saying that “There is no evidence that they have any sort of proprietary technology. There is no evidence that they can actually deliver on their claims”.

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Notorious Wall Street short stock seller, Manuel Asensio, joined in and began openly shorting Timminco. Jean-Francois Tardif and Peter Hodson, whose firm Sprott Asset management held a large position in Timminco, issued buy recommendations on the stock. Ultimately, those who shorted Timminco in 2008 were big winners, as the stock fell to pennies and never recovered.

Creditor protection provides just a small window of reprieve for Timminco. Under the CCAA Timminco’s assets are protected for just thirty days; until February 2nd. Timminco’s stock was halted today, after closing 2011 at $.15 cents.

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