Frank Magazine Issue 578.pdf - Besthostingplanever.com
Frank Magazine Issue 578.pdf - Besthostingplanever.com
Frank Magazine Issue 578.pdf - Besthostingplanever.com
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TRENTONWORKS<br />
TRUSTEE TALK<br />
BY RAY L. RHODES<br />
I AM HEARING CONFLICTING REPORTS OF<br />
RECENT ACTIVITY ON THE TRENTONWORKS<br />
FRONT.<br />
A well-placed source tells me the Dexter<br />
government replaced financial consultants<br />
Ernst & Young and appointed an NDP-sympathetic<br />
lawyer as the trustee in bankruptcy<br />
for the idle Trentonworks plant.<br />
I understand insiders perceived the rumoured<br />
Dexter changeover as politically motivated,<br />
and not a reflection on Ernst & Young’s<br />
performance.<br />
But Ernst & Young exec George Kinsman<br />
dismissed the scuttlebutt on January 28, telling<br />
me categorically, “It is not the case. We’re<br />
continuing to act as the trustee in bankruptcy<br />
for Trentonworks. Ok?”<br />
According to another source, who is<br />
uniquely knowledgable on the subject, word<br />
began circulating just before Christmas that<br />
Dexter was about to orchestrate the trustee<br />
changeover and put another firm in charge of<br />
the idle railcar manufacturer.<br />
Despite talk of backroom intrigue, the official<br />
line on January 15 from a spokesthingy<br />
with the provincial Economic Development<br />
office has status quo the order the day.<br />
“No change has been made on the file,”<br />
according to Vicki Roberts.<br />
U.S. owner Greenbrier abandoned<br />
Trentonworks in May 2007 for Mexico, leaving<br />
about 300 Pictou County workers without<br />
jobs, without severance, and staring into<br />
a void made up of a multi-million dollar pension<br />
shortfall.<br />
Greenbrier hired former Sysco trustee Ernst<br />
& Young to sell the plant; in March 2008, after<br />
a buyer could not be found, E&Y became<br />
the court-appointed trustee, and Trentonworks<br />
filed for bankruptcy, citing $6.5 million in liabilities<br />
and $4.9 million in assets. The province,<br />
ahem, the taxpayer, is the largest creditor.<br />
Via the Economic Development office, in<br />
October 2008 the ruling Tory government<br />
handed trustee Ernst & Young $2.6 million to<br />
maintain the historic plant’s facilities and<br />
equipment.<br />
Last July, the Dexter government wrote off<br />
$5 million in bad debt associated with<br />
Trentonworks.<br />
Currently, I hear negotiations are ongoing<br />
with an unidentified offshore <strong>com</strong>pany interested<br />
in purchasing the plant.<br />
Stay tuned.<br />
Does <strong>Frank</strong> Know?<br />
atlanticfrank@eastlink.ca<br />
THE USUAL SUSPECTS<br />
BAG THE CASH<br />
BY MEG A. BUCKS<br />
TIME AND TIME AGAIN, ECONOMIC<br />
DEVELOPMENT CASH THAT IS SUPPOSEDLY<br />
INTENDED TO SERVE THE GREATER GOOD OF<br />
THE PROVINCE IS INSTEAD FUNNELLED INTO<br />
THE COFFERS OF A FEW FAVOURITE<br />
COMPANIES.<br />
The January 25 announcement that ACOA<br />
has earmarked millions from its Atlantic Innovation<br />
Fund for a trio of private Nova<br />
Scotia <strong>com</strong>panies — Dartmouth-based<br />
Ocean Nutrition, Composites Atlantic Ltd.<br />
in Lunenburg, and topical cream manufacturer<br />
Origin BioMed — is but the latest example<br />
in a long, long, line of them.<br />
In 2008 I calculated that Ocean Nutrition,<br />
founded by Clearwater fish baron John<br />
Risley in 1997, had received more than $50<br />
million in government loans (all interest-free,<br />
some <strong>com</strong>pletely risk free), payroll rebates,<br />
loan guarantees, gifts and more. As of last<br />
week, that total sits in the neighbourhood of<br />
$53 million, give or take.<br />
Composites Atlantic makes <strong>com</strong>ponents for<br />
aircrafts, space shuttles and the like. Founded<br />
by Maurice Guitton in 1988, its newest influx<br />
of government funding, about $1.9 million, is<br />
to be used to develop a cost-efficient hollow<br />
core, all-<strong>com</strong>posite strut for the airline industry.<br />
It’s the third time the <strong>com</strong>pany has received<br />
funding from the Atlantic Innovation<br />
Fund, for a total of $4.4 million in provisionally<br />
repayable loans. The loans are provisionally<br />
repayable because if the particular project<br />
being funded doesn’t make any money, the<br />
government loses its investment.<br />
Since 1996, Composites has received an<br />
additional $3.3 million from other ACOA pots,<br />
and $9 million from the province, which has<br />
a 50 per cent ownership stake in the <strong>com</strong>pany.<br />
The other half is owned by French aerospace<br />
giant EADS.<br />
It’s the first time Origin BioMed, which<br />
makes over-the-counter remedies to relieve<br />
diabetic pain and cold sores, has received<br />
cash from this particular fund. It’s getting $3<br />
million spread over three years to develop<br />
new topical treatments for other ailments. Just<br />
like Composites Atlantic, the province of Nova<br />
Scotia is heavily invested in Origin, to the tune<br />
of $3.7 million. How much equity in the <strong>com</strong>pany<br />
that dollar amount represents for the<br />
taxpayers of Nova Scotia, I cannot say. But it<br />
is significant.<br />
To date, ACOA has also provided Origin with<br />
another $1.8 million in tax-free loans.<br />
ACOA mouthpuppet David Harrigan says<br />
these <strong>com</strong>panies, and others like them, get<br />
repeat business from ACOA because they<br />
represent the cream of the crop, “the best<br />
possible projects.”<br />
David says that every application submitted<br />
for consideration for AIF funding is vetted<br />
by an arms length board for quality and <strong>com</strong>mercial<br />
potential alone. Not a moment’s<br />
thought is wasted on whether the applicant<br />
has received funding before.<br />
“There’s no way we would penalize a <strong>com</strong>pany<br />
simply because it has submitted a successful<br />
application before,” he says.<br />
Alright, try this one on for size. Say there<br />
are two great projects. One’s from Ocean<br />
Nutrition, which has benefited from an obscene<br />
amount of government largesse, and<br />
one <strong>com</strong>es from a little guy without the proverbial<br />
pot, window, etc.<br />
What then?<br />
“We rely on the re<strong>com</strong>mendations of the<br />
advisory board ... nobody’s penalized ... every<br />
project is based on its own merits,” he says.<br />
‘Already repaying’<br />
A <strong>com</strong>pany’s past repayment history doesn’t<br />
enter into it, either, because research and development<br />
is so time consuming that there’s a<br />
chance money given out eight years ago hasn’t<br />
yet yielded a profitable product. But, he helpfully<br />
points out that Ocean Nutrition is “already<br />
repaying” some of its past contributions.<br />
Considering a chunk of every paycheque<br />
I’ve earned since high school has made its<br />
way to Risley&Orr Inc. — not to mention the<br />
fact that Ocean Nutrition’s Omega-3 food<br />
additive can currently be found in orange juice,<br />
salad dressing, breakfast cereal, frozen yogurt,<br />
brownies and bagels the world over — I<br />
would bloody well HOPE that Ocean Nutrition<br />
is already repaying its debt to the Canadian<br />
taxpayer.<br />
In an interesting bit of timing, a Canadian<br />
Press story concerning ACOA’s tendency to<br />
keep doling out its cash to the same cast of<br />
characters appeared just nine days before the<br />
latest AIF announcement. In the story, scribe<br />
Michael Tutton reveals that six <strong>com</strong>panies<br />
and one university-affiliated corporation have<br />
received cash from ACOA every year, like<br />
clockwork, since 1989.<br />
The most notable local <strong>com</strong>pany in this pack<br />
is John Bragg’s Oxford Frozen Foods,<br />
which has received $12.4 million in that time<br />
period. Perhaps more disturbing is that a staggering<br />
82 other <strong>com</strong>panies have received<br />
cash in at least 10 of the last 20 years, for a<br />
total of $203 million.<br />
CONTINUED ON NEXT PAGE<br />
FEBRUARY 16, 2010 ATLANTIC CANADA FRANK 19