Winnipeg Free Press

Winnipeg Free Press (Newspaper) - July 28, 2015, Winnipeg, Manitoba C M Y K PAGE B4 BUSINESS BUSINESS EDITOR: SHANE MINKIN 204- 697- 7308 I BUSINESS. DESK@ FREEPRESS. MB. CA I WINNIPEGFREEPRESS. COM TUESDAY, JULY 28, 2015 B 4 I T was easy to understand early on why IMRIS Inc.' s financial results would be " lumpy." The company formed in Winnipeg a decade ago by hard- headed entrepreneur David Graves makes MRI- guided medical and surgical therapy systems that are embraced by the international medical community, producing significant improvements in patient outcomes. But they are very expensive units - from $ 3 million to $ 12 million depending on the configuration - and regardless of how keen the medical institution is in having one, the sales cycle was very long. It has not worked out. Revenue declined every year from 2012 to 2014. The company's shares plummeted from a high of $ 8 in April, 2011 to 4.3 cents on May 25, the day the company filed for creditor protection. It's now just waiting for court approval of the sale of its assets to a New York fund, Deerfield Management Co., its secured lender and funder through the bankruptcy protection process. The long sales cycle meant it would be feast or famine for IMRIS, not the best strategy for a publicly listed company. Eventually, shareholders were scared off. Along the way, IMRIS acquired a couple of other very high- tech surgical technologies, including an Alberta company that developed a neurosurgical robotic arm. The company moved to a Minneapolis suburb in 2013, ostensibly to aid its marketing to rich U. S. hospitals, access a larger pool of talent in Minneapolis's Medical Alley and also to provide a better profile to the U. S. capital markets. When it went into bankruptcy protection, IMRIS owed Deerfield $ 26.9 million in secured debt and has another $ 11.8 million in unsecured debt. The good news to the medical community is Deerfield plans to continue to operate the company. The fate of the unsecured creditors is not so good. In a prepared statement, company CEO, Jay Miller, said, " IMRIS is very excited that Deerfield will be acquiring the company's imaging and service operating businesses... With Deerfield's support and leadership, the hard work and dedication of the IMRIS employees and our loyal customers and suppliers, we truly believe that the company will be positioned to better serve our existing and new installations and customers." It's not to say the move from Winnipeg was the fatal blow, but many of its senior Winnipeg staffers did not make the move. Some have said lag time in staffing in Minneapolis cost the company sales. Winnipeg did benefit to the extent some of the former IMRIS staffers teamed up to form a new company using imaging technology in a promising Winnipeg startup called Cubresa Inc., including John Saunders, the founder of the company that later became IMRIS, Ron Sabourin, the former CFO of IMRIS and Cubresa founder James Schellenberg and his brother, Bob, both of whom held senior technical positions with IMRIS. But the IMRIS legacy in Winnipeg might have been much greater. That's because the technology - which allows magnetic resonance imaging machines to be moved in and out of surgery rooms without disturbing the magnets - was developed by the National Research Council in Winnipeg. Ian Smith, the retired former director general at the NRC's Institute of BioDiagnostics, does not mince words. " It was mismanagement first- class as far as I am concerned of a product that is unique and desired," Smith said. Meanwhile, a homegrown technology that may yet have another life under new ownership is divorced even further from its roots in Winnipeg. The Harper government shut down the Institute of BioDiagnostics a couple of years ago and the NRC sold its shares in IMRIS when they were still worth something. Rather than remain a centre for a unique, in- demand technology that can save lives, the medical research community here is just another customer, no different than any other. martin. cash@ freepress. mb. ca MARTIN CASH DETROIT - Fiat Chrysler could be required to lay out hundreds of millions of dollars to get potentially defective Ram pickups and older Jeeps off the road under a deal with U. S. safety regulators to settle claims the automaker mishandled nearly two dozen recalls. The National Highway Traffic Safety Administration is requiring the company to offer to buy back certain Ram pickup trucks and Dodge and Chrysler SUVs with defective steering parts that can cause drivers to lose control. More than 579,000 vehicles were initially recalled in 2013, but the company would only be required to buy back a third of those because many of the pickups have already been repaired. The Italian- American automaker must also allow owners of more than a million older Jeeps with vulnerable rear- mounted gas tanks to trade them in at above market value or give them US$ 100 as an incentive to get a repair. Fiat Chrysler also faces a record civil fine of up to US$ 105 million. The settlement is the latest sign U. S. auto safety regulators are taking a more aggressive approach toward companies that fail to disclose defects or don't properly conduct a recall. " Merely identifying defects is not enough," U. S. Transportation Secretary Anthony Foxx said Monday during a conference call with media. " Manufacturers that fail in their duty to fix these defects will pay a price." Nearly 1.3 million Rams, Chrysler Aspen and Dodge Durango SUVs and Dodge Dakota pickups from as far back as the 2003 model year were recalled for the steering problem in 2013. The U. S. government excluded around 700,000 of the oldest models from the buyback program because most have already been repaired or are no longer on the road. But it ordered the buyback for up to 579,000 vehicles from the 2008 through 2012 model years. Of those, around 193,000 have not got the recall repairs and are eligible for either a repair or a buyback, according to recall reports submitted to the U. S. government by Fiat Chrysler. In each case, Fiat Chrysler would be required to pay the original purchase price plus 10 per cent, minus a certain amount for depreciation. LouAnn Gosselin, a spokeswoman with Fiat Chrysler Canada, said the buyback program is a response to a decision by American regulators and does not include Canadian vehicles. She said the company is working with regulators on both sides of the border to determine if the decision will have any impact in Canada. The ultimate cost of the settlement depends on how many pickup and SUV owners join in. According to Kelly Blue Book, a 2010 Dodge Ram 1500 - one of the smaller, less- expensive trucks involved in the recalls - could fetch $ 20,000 in a dealer trade- in, assuming the truck has 96,560 kilometres on it and is in " good" condition. At that rate, FCA could spend US$ 956 million to buy back one- quarter of the vehicles at issue. The company is allowed to repair and resell the trucks it buys back. The American government knows of at least one death attributed to the steering defect. The older Jeeps have fuel tanks located behind the rear axle, with little to shield them in a rear crash. They can rupture and spill gasoline, causing a fire. At least 75 people have died in crash- related fires, although Fiat Chrysler maintains they are as safe as comparable vehicles from the same era. Fiat Chrysler must offer US$ 100 to Jeep owners as an incentive to get a repair or a trade- in incentive of US$ 1,000 toward the purchase of another Fiat Chrysler vehicle. The repair consists of adding a trailer hitch to the Jeeps. FCA has already repaired around 441,000 of the 1.5 million Jeeps recalled. The Jeep trade- ins could add to the tab, but they also could generate more new vehicle sales by getting customers into showrooms. Still, the total could strain the parent company, Fiat Chrysler Automobiles NV. - The Associated Press Pulling the plug on IMRIS a sad fate T ORONTO - A black tank- like truck cruises downtown Toronto, prompting stunned pedestrians to whip out their smartphones to provide proof of what they've seen. What they've seen is the Conquest Knight XV. It is a rare beast. There are only 17 in the world, sold to the likes of Middle Eastern royalty and a basketball star. The vehicle starts at $ 629,000, but most go for several hundred thousand dollars more. It weighs twice as a much as a Hummer and it can stop a bullet from an AK- 47. And it's made in Toronto. By hand. It takes about six months to build a Knight XV, and Conquest Vehicles machine their own parts out of stainless steel and aluminum. The opulent armoured Knight XV ( which stands for " extreme vehicle") is a magnet for attention everywhere it rolls. The Canadian Press saw proof on a recent ride through downtown Toronto. One man, overcome with excitement, drives beside the truck screaming " that is the best ( expletive) truck I've ever ( expletive) seen!" as he pumps his fist out the window. " I thought it was the new Batmobile," another onlooker, Sean Culham, says as the truck sat outside a posh downtown hotel. That's the reaction William Maizlin was hoping for when he dreamed up the idea. Maizlin, the company's former president, went to a friend ( a silent partner, he says) with the idea of building a military- style truck for the consumer market back in 2006. He spent nearly two decades in the military industry, focusing much of his efforts on armour. They built the first one in King City, north of Toronto, and took it to a car show in Las Vegas in 2008. That sparked interest, and Conquest Vehicles was born. The Knight XV is gargantuan, weighing in at 6,400 kilograms. Each ballistic steel door weighs 160 kilograms, or about the size of two small men. This truck doesn't guzzle gas. It inhales it - about 34 litres per 100 kilometres, according to the company. But the last thing on the minds of Knight XV's owners is the cost of fuel. The most blinged- out version costs about the same as the average price of a Toronto home. " The interior is fully customizable," says Tim Chapman, the president of Conquest Vehicles, on a tour of the warehouse in north Toronto in late June. There are four trucks in the warehouse at the moment, including a nearly completed redesigned model that is about a half- metre longer and 20 centimetres wider than the original. The only one owned in Canada is the company demo truck - most are overseas. " There is no market in Canada for armoured vehicles," Maizlin says on the phone. " And thank God, because Canada is a very safe country, but there are other hot zones in the world where there is a big need for security." As Chapman points to the various security measures of the truck - " the tires can get shot and still run for 80 miles" - he talks about the Knight XV that went rogue in Ukraine. That truck was taken by anti- government protesters. It was later found in the garage of Viktor Yanukovych Jr., son of the former Ukrainian president of the same name, who fled for Russia last year. Chapman says they sold the truck to a man in Ukraine who may have acted as a broker with the Yanukovych family or simply resold it to them. The truck has been repainted in camouflage colours and is being used in the conflict. He knows this because those who took it have called Conquest Vehicles asking for parts. He referred them to Ford because the truck is built on an F- 550 chassis. Despite all the truck's security features, Chapman and Maizlin both say its appeal to many of its drivers is the sheer audacity of its appearance. Basketball star Dwight Howard bought one, as did the prince of the United Arab Emirates. They've even made a few non- armoured versions - called the Evade - for clients in countries that don't allow armoured cars. Neither Chapman nor Maizlin will name other names because of confidentiality agreements, " which is ironic because they're buying it for the attention," Maizlin says. Both say the clients are all of a similar ilk: rich, flashy and, in some cases, concerned with their own safety. " They are collectors," Chapman says. " They want to make an impression, to have something different, and some are worried about their safety." That's why the windows are 3.2 centimetres thick - enough to stop a bullet from an AK- 47. And they roll down, apparently a rarity for bulletproof windows. Chapman is, in many ways, the opposite of the truck he builds. He is slight, soft- spoken and drives a BMW M6 sports car. He gets into into the back seat of one of the trucks, and eases into the soft Muirhead leather. Despite the massive room, there are only two seats in the back. There is a television, and an iPad controls everything. One swipe and the electrostatic windows blacken. Conquest is owned by Elgner Group Investments Ltd., a private company made up of entrepreneurs. Chapman says they have big plans for the future. A group of Chinese investors is considering buying a few, he says. " China seems to be the hottest market for it," he said, adding they've already sold seven cars to wealthy Chinese. The company hopes to ramp up production to 25 trucks a year by 2017. - The Canadian Press Automaker ordered to offer buybacks It's a tank! No, it's a truck Extreme machine made in Toronto can stop a bullet By Liam Casey Fiat Chrysler settling claims it mishandled nearly two dozen recalls By Tom Krisher And Dee- Ann Durbin GALIT RODAN / THE CANADIAN PRESS A Conquest Knight XV parks in downtown Toronto. The vehicle, which is made by hand, starts at $ 629,000, but most go for several hundred thousand dollars more. B_ 04_ Jul- 28- 15_ FP_ 01. indd B4 7/ 27/ 15 7: 42: 24 PM ;