Friday, March 14, 2008

Jilted would be Terminal owners to Ottawa: Show Us the money!

Ottawa may be on the hook for a 30 million dollar payout, should a consortium of companies which wanted to purchase Ridley Terminals win their court case over a privatization plan that never happened.

Krisendra Bisetty of Business in Vancouver magazine outlined the moves by the group as they prepare to take their case into B. C. Supreme Court, seeking damages of more than 30 million dollars after the on again, off again sale reached off again status in 2006.

Rupertites will remember that the fate of Ridley Island Terminals became one of the key topics during the last federal election, and it was when the Harper government took office that the planned sale was cancelled. (Podunk passim 1 and Podunk passim 2).

The resurgence of the coal market as outlined in this Daily News article from 2006, is just one example why the consortium is now taking things to another level.

The march to the courts is just the continuation of the always interesting events that have surrounded the Terminal in the last number of years.

The Daily News featured the latest developments in Thursday’s paper.

Would-be buyers of Ridley Terminals seek $30m
By Krisendra Bisetty
Business in Vancouver
March 13, 2008

The Crown is facing a damages claim seeking more than $30 million over the on-off sale of the dry bulk assets of Ridley Terminals Inc.

In papers filed in B. C. Supreme Court, the plaintiffs claim Ottawa backtracked from selling the federal Crown-owned coal facility despite allegedly giving approval expressly or implied, of their binging acquisition proposal.

The plaintiffs, Northwest Bulk Terminals Inc., Federal White Cement Ltd., and Fortune Minerals Ltd.., an Ontario natural resource company with a northwester B. C. coal project that’s in the permitting stage, claim they were the preferred bidder for the assets of the money-losing Crown corporation.

Northwest had offered $20 million for assets that had cost taxpayers approximately $240 million when they were built in 1983.

The planned privatization was initiated in 2002, when the coal industry was still in the doldrums, But the plaintiffs alleged the value of the assets as a going concern was significantly less than its initial cost.

According to their claim, Ridley which is also cited as a defendant, wrote down the value of approximately $25 million in 1990 and by a further $6 million in 2002.

Ridley thereafter received several advances from the Crown to cover cash shortfalls, said the plaintiffs, who added that by Dec. 31, 2006, the corporation had racked up an accumulated deficit of $186.1 million.

As part of court documents, the plaintiffs said they provided access to their confidential business plans for the terminal, including a product diversification strategy.

Things started to turn against them, however, as a result of a delay in finalizing the sale. From 2003 to 2006, the outlook for the coal industry improved, and there was broad expectation that Ridley would see a bigger volume throughput. As well, “political interests” opposed to the sale took steps to “interfere” with their proposal, the plaintiffs claim.

In February 2006, the plaintiffs said they were informed through various sources, including the media, that the Crown planned to discontinue dealing with them.

The Crown later confirmed it would terminate the process for the divestiture of Ridley’s assets.

The plaintiffs claim that amounted to breach of its obligations, ”contractual and otherwise.” They added that the defendants had “wrongly” used their confidential information to develop and implement a modified business plan for Ridley.

Robin Goad, president and CEO of Fortune Minerals, which together with Federal White Cement owns the shares of Northwest Bulk Terminals, said they have yet to hear a response to the action, which includes a damages claim totaling $31,250,000.

In an interview, Goad said that the alleged government about0turn was huge disappointment, “We felt it was a great opportunity that had been overlooked by others,” he said of the coal facility.

“A lot of people had felt that the coal business was dead, and we disagreed. We felt there was a good opportunity there, so it would have been a very lucrative asset for us, and we’re disappointed in the way that the government handled it.”

Ridley’s president and CEO Greg Slocombe, who said the summons had yet to be served, declined to comment on the action, referring inquiries to the federal government.

He said in 2007 the facility, which was built to provide an export point for vast reserves of metallurgical and thermal coal in northeastern B. C., handled 5.1 million tones of commodity, most of which was coal. Ridley also processed wood chips and petroleum coke.

“It always has had a significant value, but it has much better cash flows today than it had a few years ago,” Slocombe said of the Ridley Island facility.

”It’s just the fact that we’ve got volume whereas a couple of years ago, we really didn’t have any activity.
Photo above from the Ridley Island website

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