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SOMBA K'E/YELLOWKNIFE - Discovery Air says there is nothing unusual about its $34 million loan from the territorial government, adding there is little risk to taxpayers should the company be unable to pay it back.

Yellowknifer attempted to contact Industry, Tourism and Investment Minister Bob McLeod to ask him whether the loan was secured should Discovery default on it but press secretary Julia Mott directed enquiries to the company.

David Jennings, CEO of Discovery Air - owner of Air Tindi, Great Slave Helicopters and Discovery Mining - called the $34-million loan the company received from the government's opportunities fund on Jan. 19 "highly secured." He said the company's assets backing the loan are in the neighbourhood of $110 million.

"It's backed by a value that far exceeds the amount of the loan," he said, adding this collateral is exclusive to the government.

"The assets backing the loan are about $14 million in real estate, over $50 million worth of aircraft and also some shares in subsidiaries valued at over $60 million," he said.

Although he said he could not yet legally comment on the $60 million in subsidiary share assets, he said they should "not be affected by decreases in exploration or anything like that."

Jennings said the company's fleet of aircraft is valued at over $100 million, excluding military aircraft.

The company owes more than $100 million in long-term debt.

GE Capital Solutions lent Discovery about $50 million but assets backing their agreement are separate from those in Discovery's loan agreement with the government.

Discovery also has a line of credit with the Royal Bank of Canada, which it uses for operating expenses such as fuel and supplies in the spring.

Wade MacBain, Discovery's director of investor relations, said the line of credit is balanced at zero money owing. The $34 million loan was used by Discovery to pay off a $33 million loan from Pacific and Western Bank of Canada that was set to mature Feb. 1, 2009. The $33 million loan allowed Discovery to purchase Top Aces - a Canadian Forces training service supplier, with its head office in Pointe-Claire, Que.

Jennings said the company took the government's offer in order to move away from the Pacific and Western Bank - the founder of the company. "We made a move to become fully independent," he said.

MacBain said Discovery had three or four offers for financing and the territorial government provided the best option.

"In the old days, we would have received seven or eight or nine offers," he said. "That's not the environment we are in today."

He said a 10 per cent interest rate was the best offer Discovery got.

Dave Ramsay, MLA for Kam Lake, has raised questions about the deal and said he still hasn't seen anything from McLeod or Finance Minister Michael Miltenberger that would answer those questions.

"I still think it's a risky deal. I haven't been proven otherwise," he said.

"I mean, they are $104 million in debt. They are only worth $47 million in market-value."

MLAs sent a letter to the two ministers about the government's due diligence on a credit check of the company before the deal was reached and Ramsay has yet to hear back. Ramsay said he - and he expects other MLAs - will be asking McLeod and Miltenberger about the deal during next week's legislative assembly session.

MacBain said loan deals are never without some risk.

"If you assume that there was never going to be any business for any of our assets, I guess, it would be tough to pay it back," said MacBain.

"It's normal business risk, but we have good assets in place," he said of the deal.

He said the company's Yellowknife assets will be somewhat affected by the slumping exploration sector, but was quick to add Air Tindi and Great Slave Helicopters did a majority of their business with the government and diamond mines. He added Top Aces deals exclusively with federal government contracts.