Bar C Posted January 23, 2009 Report Share Posted January 23, 2009 Here we go Loan rouses interest in bailout fund Herb Mathisen Northern News Services Published Friday, January 23, 2009 SOMBA K'E/YELLOWKNIFE - Monday's $34 million government bailout of Discovery Air may have other ailing companies lining up for emergency loans during slowdowns in the territory's exploration industry. Industry, Tourism and investment minister Bob McLeod said Discovery Air - owner of Air Tindi, Great Slave Helicopters and Discovery Mining Services - came to the government with an unsolicited request in early December. "They came to us and we looked around to see what we had in our tool kit to help businesses and we found the Opportunities Fund fit the best," he said. The government loaned $34 million to Discovery - with a 10 per cent yearly interest rate - to be repaid in 48 months. "We see it as an investment and we expect to make money," said McLeod, referencing the "high interest rate." He twice called the loan a "stimulus" in an interview on Wednesday. McLeod said two other companies approached the government looking for loans before Christmas. The Opportunities Fund was established in 2003 and collects federal funds the territory can invest as they see fit. The fund, which contained around $130 million before the loan, needs to be paid back every five years. Steve Tanton, co-owner of Summit Air - a competitor of Air Tindi - said he was surprised when he heard the announcement and added no one from the government had made the offer - or the opportunity known - to his company. Summit Air recently announced temporary layoffs due to a slowdown in exploration. Tanton said although Monday's announcement was the first he'd heard of the Opportunities Fund, the company would look into it as an option in the near future. "We will be pursuing it as well," he said. Summit Air employs 15 pilots and 25 support employees, based on 2007 numbers, and has a fleet of eight aircraft. Dave Ramsay, MLA for Kam Lake, said he has received several calls from the public about market disruptions and contract tendering concerns following the announcement. "How is the government going to look at contracts with any type of neutrality when there is a $34 million loan out there to one company?" Asked whether he saw concerns with the government awarding contracts in a sector where it has $34 million invested in one company, Tanton replied "potentially." McLeod said he didn't see any potential for conflict. "If you are a Northern company, I don't think you'd have anything to be concerned about," he said, referring to the government's Northern preference policy. McLeod said $30 million from the fund is being paid back to the federal government, which leaves approximately $60 to $65 million left in it. He said that could be invested in businesses if they meet government requirements. Ramsay said he wants to know what the requirements are for businesses if the government starts investing in companies out of the fund. He said non-cabinet MLAs were told the government had already loaned out the $34 million at an "urgent" meeting late last week. While he saw the merit of helping out a company that employs hundreds of workers in the North, he did not know the fund was slated to be used to lend money to businesses and said so far he hasn't seen any due diligence to point out how the company was going to pay the government back. "It's putting $34 million of the public purse at risk, because if they don't make good on paying the loan back, it's on our backs and we're in enough trouble as it is," he said. Quote Link to comment Share on other sites More sharing options...
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