Spin-off development corporation aims to produce financial stabililty: Makivik

Makivik Corp. board members Rhoda Kokiapik and Raymond Menarik address the organization’s annual general meeting in Tasiujaq March 21. Kokipiak and Menarick are also members of Makivik’s Structural Review Committee, which recommended the creation of Makivik’s new development corporation, (PHOTO COURTESY OF MAKIVIK)

Makivik Corp.’s new development corporation hopes to strengthen the organization’s investments while freeing up its reliance on government funding, Nunavik Inuit heard at Makivik’s annual general meeting in Tasiujaq this week.

Last fall, Makivik’s board of directors flagged the organization’s slow revenue growth, prompting a review of its investments and business activities.

A review found Makivik’s equity had not kept up with inflation and population growth over the years since the James Bay and Northern Quebec Agreement was signed in 1975.

Makivik started with $159 million in cash equity and grew that to $417 million in 2016. But given that the region’s population has tripled since the mid-1970s, that equity should sit at $643 million, delegates heard.

Those findings prompted the creation of Makivik’s new development corporation earlier this month, an arms-length entity to oversee the day-to-day operations of Makivik’s subsidiaries and its joint ventures.

“We want to make sure to take every opportunity to develop businesses in the region,” Makivik president Jobie Tukkiapik said at its launch.

Makivik struck a committee to help implement the new corporation, which should be in place by mid-2017.

According to a report prepared by the committee and presented to meeting delegates March 21, Makivik has received $311 million in funding through the Sanarrutik Agreement, a 2002 deal with Quebec that provides money for economic and community development, including organizations such as the Avataq Cultural Institute and Nunavik’s landholding corporations.

Over the 25-year lifetime of the agreement, it’s expected to pay out $1 billion to Nunavik organizations.

But the agreement will end in 2027, with little guarantee it will be replaced with another major funding deal.

“What will these organizations, and for that matter, Makivik, do if and when Sanarrutik funding is no longer available?” the report asked.

A review of Makivik’s investments also showed it’s not producing a strong cash return, while most of Makivik’s subsidiaries and joint ventures showed losses.

The new corporate entity, simply called DevCo for the time being, will hold the voting shares in Makivik’s wholly-owned subsidiaries, which include First Air and Air Inuit, with the ability to hold ownership in non-wholly owned subsidiaries and joint ventures.

“It’s more to ensure Makivik’s investments produce an acceptable cash return [and] give us the best chance to grow sufficiently,” Tukkiapik said.

The new corporation should also help Makivik avoid potential conflict when dealing with government files and negotiations.

DevCo’s chief financial officer would be required to report on its operations to Makivik three times a year.

A new six-member board of directors will be named to oversee the new corporation and Makivik’s business interests—apart from First Air and Air Inuit, which will continue to operate under their own boards.

The implementation committee has until June 2017 to draft policy, criteria for its board members, a first budget and start the process of incorporation, Makivik said.

Makivik’s AGM in Tasiujaq wraps up today, March 23.

Makivik Structural Review Committee Report — AGM2017 by NunatsiaqNews on Scribd

This graphic shows the uneven performance of Makivik’s various subsidiaries, a factor that led to their decision to put the birthright corporation’s business holdings into a standalone development corporation. (MAKIVIK POWERPOINT PRESENTATION)