Inuvialuit poured $32M into NTCL, which borrowed many millions more
NTCL setting aside bonuses for 8 undisclosed 'key' employees as company restructures in time for sealift
Northern Transportation Company Ltd. (NTCL) has borrowed more than $100 million in recent years from banks as well as its owner, the land claim organization for the Inuvialuit region, according to court documents filed late last week.
Now the cash-strapped company plans to dig even deeper into its owner's pocket to ensure the 2016 community resupply can happen.
On Wednesday, the Court of Queen's Bench of Alberta granted NTCL protection from its creditors as the company seeks to restructure itself in time for this summer's shipping season, which typically kicks off in June.
NTCL said last week it lacked the ability to carry out the season unless a restructuring of the company takes place.
Court documents submitted before the protection was granted show that NTCL's owner, the Inuvialuit Development Corporation (IDC) — through a holding company, Norterra — loaned NTCL $32.4 million in recent years, with no fixed term of repayment.
IDC is the economic development arm of the Inuvialuit Regional Corporation (IRC), the region's land claim organization.
IRC's March/April newsletter to beneficiaries makes no mention of the substantial financial aid provided to NTCL.
Inuvialuit to loan NTCL up to $9.3 million more
In 2014 IDC bought Nunasi Corporation's share of NTCL to become the sole owner of the marine shipping company, which hasn't made money in nearly a decade.
Though NTCL posted a net loss of $5.4 million from its operations in 2015, the support from IDC is poised to keep coming.
The Alberta court authorized IDC to give NTCL up to another $9.3 million in financing under a short-term loan. The money will partly be used to pay for the company's day-to-day operations during the 2016 sealift.
While the annual community resupply accounts for only 15 per cent of NTCL's overall revenues, many remote N.W.T. communities rely solely on the summer sealift for large, otherwise-difficult-to-transport goods and materials. Norman Wells, for example, is waiting on the materials to hard-surface several community roads.
"NTCL and IDC consider it critical that NTCL continue as a going concern, both to preserve its value and to ensure that Northern residents have critical supplies," Kyle Barsi, NTCL's vice-president of finance, wrote the court in an affidavit.
Banks, N.W.T. gov't owed money
NTCL also owes, and is in default on, a $72 million loan from the Bank of Nova Scotia, HSBC Bank of Canada and Canadian Western Bank, although those banks have agreed not to demand repayment for the moment.
NTCL also owes $9.7 million to Vancouver-based ITB Marine Group Ltd.
In 2013, NTCL agreed to purchase 15 unspecified vessels from ITB through monthly payments of $233,000 until 2018.
"NTCL made the payments for February and March 2016, but as these payments were made later than usual… ITB has claimed NTCL is in default, which NTCL disputes," wrote Barsi.
A recently-formed NTCL subsidiary that sells fuel to communities in the N.W.T.'s Mackenzie Delta region also owes money — to the territorial government.
Beaufort Delta Petroleum Corporation has borrowed $1.9 million from the Northwest Territories Business Development and Investment Corporation, with only $100,000 of that paid back so far. The corporation is owned by the territorial government.
Bonuses to be paid to small number of employees
NTCL employs 17 people on a full-time basis and up to 150 more people during the summer shipping season, which typically lasts from June to October.
Last week's court protection order also allowed NTCL to pay bonuses to eight "key" employees the company does not want to jump ship.
The individual bonuses, which could total a maximum of $100,000, range from 10 to 25 per cent of each employee's salary.
Details on which employees will get a bonus were sealed at the request of NTCL.
The employees slated for bonuses "have valuable corporate knowledge that cannot be easily replaced" and/or "are engaged in relationships with key clients," according to a report from NTCL's monitor, PricewaterhouseCoopers.
Nathan Graham, the Inuvialuit Regional Corporation's chief corporate officer, told CBC North last week he was "not sure" if the company will have to lay off employees under its restructuring effort.