GNWT buys NTCL assets for $7.5M
Government wants operator to run resupply barges along Mackenzie River
John McFadden
Northern News Services
Monday, December 19, 2016
NORTHWEST TERRITORIES
The Government of the NWT confirmed Dec. 16 that it is spending $7.5 million to purchase the assets of Hay River-based Northern Transportation Company Limited (NTCL).
A barge on a NWT waterway. The territorial government will pay $7.5 million to purchase assets of the financially insolvent Hay River-based barge company Northern Transportation Company Ltd. - photo courtesy of Shane Sadoway/Northern Transportation Company Ltd |
The financially insolvent company, owned by NorTerra, an arm of Inuvik-based Inuvialuit Development Corporation, announced April 27 it was seeking creditor's protection.
NTCL, once one of the largest barging companies in Canada, runs barges up the Mackenzie River and operates a shipyard in Hay River.
"This timely action has been taken to protect the petroleum product supply chain for NWT communities along the Mackenzie River and Arctic coast," stated a news release from cabinet spokesperson Andrew Livingstone on Dec. 16.
"Reliable and dependable barging services are a lifeline for many remote NWT communities and industries that do not have other options for obtaining fuel and other goods economically."
The new release went on to state that NTCL's specialized equipment is essential to marine resupply along the Mackenzie. It added that the GNWT's purchase of these assets will help ensure small NWT communities will continue to get the fuel and goods they need and reduce the likelihood that increased transportation costs would raise the price of power and other goods in these communities.
The high cost of living is a significant problem for residents of small communities that the GNWT is committed to addressing, the news release stated.
Finance Minister Robert C. McLeod stated in the same news release that it is the government's responsibility to ensure those communities get the supplies they need at an affordable price.
"Purchasing NTCL assets was good value for money and makes sure that the marine transportation sector in the NWT will be sustained," McLeod stated.
"The GNWT will be reaching out to private sector partners in the coming months to come up with a made-in-the-North marine transportation services solution for our residents."
The news release stated that it does not intend to operate the more than 80-year-old company's marine fleet with its own forces but will look to partner with an expert private sector marine operator.
Wally Schumann, minister for Public Works as well as transportation, who is also the MLA for Hay River South, was unavailable for comment as of press time.
John Vandenberg, assistant deputy minister for Public Works, energy division, said the government's bid was substantially higher than the only other bid for the assets - $2.2 million - for a reason.
"We understood that we would not be admitted into court unless we were able to provide a substantially higher offer than the $2.2 million, Vandenberg said of last week's court proceedings in Court of Queen's Bench in Calgary.
"I'm not going to speculate as to whether the court or the judge thought that $2.2 million was very low.
"Typically a court will not open the process or even consider someone unless they offer something substantively greater."
Vandenberg said he understands that the $7.5 million will be split between preferred creditors, including NTCL pensioners whom he said have been left short, and a number of other secured creditors, likely including banks.
Vandenberg said one of the next steps for the territorial government is to issue a request for proposals (RFP) for potential operators to operate the barging assets it acquired.
"Like we do with the water bombers for example. We own the assets with the bombers but we don't actually fly aircraft. We don't hire any GNWT people as pilots. We contract that out," Vandenberg said. 'We would do a similar thing with this."
He added he is confident there will be interest in taking over the barging contract.
R.J. Simpson, MLA for Hay River North, said the government has done the right thing. He said the investment helps the community of Hay River as well as the smaller communities up and down the Mackenzie that NTCL serves.
"It makes sense. NTCL was profitable at one point. If this undertaking is managed properly the government is going to recover that cost and likely generate revenue as well," Simpson said.
Simpson said with the GNWT buying NTCL's assets, the opportunity is there for a Northern entrepreneur to step in and turn a profit.
News/North reported in May that court documents showed NTCL owed $32 million in loans to Inuvialuit Development Corporation and $72 million to banks. The number has reportedly grown since then.
The Inuvialuit Development Corporation owns NorTerra Inc., whose subsidiaries include NTCL and Canadian North. The debt owed by NTCL reportedly could be pinned to Canadian North.
Steve Hankirk, president of Canadian North, issued a statement on Dec 16.
"Canadian North has been asked to comment on NTCL's … court proceedings and their potential to impact NorTerra's businesses," stated Hankirk.
"While the proceedings remain before the courts, I can state that no new information has come forward that pertains to Canadian North and it remains business as usual for our employees, customers and vendors.
"Canadian North, one of NorTerra's most profitable subsidiaries, has supported the debt of NTCL for several years. The resolution of NTCL's financial obligations will allow Canadian North to come through this as an even stronger airline and position us for a return to growth."
