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SOMBA K'E/YELLOWKNIFE - David Jennings, president and CEO of Discovery Air, doesn't profess to know the inner workings of the NWT government.

But he does know when a company is looking for financing, previous lenders are a good place to start.

Years ago, Discovery Air subsidiaries Air Tindi and Great Slave Helicopters received loans to buy aircraft from the GNWT's Aurora Fund I and II. In January, Discovery became the first company to receive a loan from the Opportunities Fund, which is similar in nature to the Aurora Funds. - photo courtesy of Discovery Air

Discovery penned a deal with the territorial government in January to borrow $34 million through the GNWT's Opportunities Fund, becoming the first company to do so, and as a result, bringing the one-time unknown fund to the forefront.

While, until Discovery, the fund had only been used for passive investment, explaining its quiet status, it is similar in nature to the government's much-talked-about Aurora Fund I and II of the '90s - under which Discovery's subsidiaries received thousands.

"Both the aviation subsidiaries (Great Slave Helicopters and Air Tindi) in Yellowknife have borrowed from the Aurora Fund before," said Jennings.

He added Discovery had been looking in "all kinds of places" for cash, hiring a Toronto firm to sniff out financing possibilities.

Discovery owns Great Slave Helicopters, Air Tindi and Discovery Mining Services and employs about 275 Northern workers.

Operating under the shaky economy, Discovery unexpectedly needed the money to refinance $33 million of debt, acquired when the company purchased a Quebec-based aviation company in 2007.

"One of the normal places to look is where you've had financing before," said Jennings, explaining the company's turn to the GNWT.

"Since we used the Aurora Fund before we knew of its (the Opportunities Fund) existence," he added.

Under the Aurora Fund, Air Tindi received a $1,656,000 loan, which matured Oct. 1, 2005. The company also received $3,700,000 under the Aurora Fund's successor, the Aurora Fund II. Great Slave Helicopters received two loans, both under the Aurora Fund II, one for $1,500,000 and one for $600,000.

Funding from all four loans went toward aircraft lease. At the time of the Aurora Fund loans, neither company had yet been purchased by Discovery Air, which was founded in 2004 to unite niche aviation companies under one banner.

Both the Aurora Fund (I and II) were established under the Canada Immigrant Investor Program, as well as the Opportunities Fund. Under the Aurora Funds, foreign investors pledged $250,000 for a fast-track to Canadian citizenship.

The first Aurora Fund launched in 1996 and the second Aurora fund began to wind down in 2000, after the federal government changed regulations. Both funds used their coffers to provide Northern businesses with borrowing capital.

The Opportunities Fund was established in the NWT in 2003, again funded through the federal government's Immigrant Investor Program. The program collects $400,000 from immigrant investors seeking to enter Canada. The funds are redistributed to participating provinces and territories who can invest the money into their own economy as they see fit.

At the end of five years, the territory or province must repay the cash to the federal government, which returns the $400,000 to the investors with no interest added.

Unlike other jurisdictions loaning companies cash from their fund, however, the GNWT had no formal application in place for applying for financing.

In February, under increasing pressure from MLAs, Bob McLeod, Industry, Tourism and Investment Minister, agreed to a review of the fund's procedures, including a pledge to work to establish a formal process.

"That work is underway for presentation to both the Financial Management Board" and to the legislative standing committee on economic development and infrastructure, said Peter Vician, deputy minister of ITI and chair of the Opportunities Fund board of directors

Vician said he expects the department will make its presentation to the FMB and the committee in May.

He said no further applications for loans under the fund will be considered until the review on how to operate the fund and distribute funding is completed. Jennings declined to comment on the process for Discovery's loan under the fund.

"Did it go smooth? Certainly we got it done," he said.