NTCL: the death of a hyped-up dream
"Tens of millions of dollars worth of collectively-owned Aboriginal wealth is likely to be incinerated"
When Nunasi Corp. and the Inuvialuit Development Corp. teamed up to buy Northern Transportation Co. Ltd. from Ottawa in 1985 for $27 million, the creation of this new Aboriginal-owned company, a federal Crown corporation since 1944, was hyped as the start of a new golden age in northern economic development.
Wealth! Jobs! Northerners in control!
We now know these dreams were delusions — and shabby ones at that.
This past April 25, NTCL admitted not only that it’s flat broke; they admitted also that they carry a debt so large it could threaten the financial health of sister companies owned by IDC’s holding company, Norterra.
Documents the company filed last week in Court of Queen’s Bench of Alberta — part of a bid to stave off imminent bankruptcy and buy time to restructure the company — reveal that NTCL’s liabilities amount to a staggering $120.6 million, most of it debt owed to its unlucky lenders.
On the other side of the ledger, NTCL claims assets worth only $44.8 million. In 2015 alone, they posted a loss of $29.36 million. As of April 18, the company’s bank accounts held only about $3,000 in cash.
The company pension fund, which is supposed to guarantee a defined benefit pension plan for retired NTCL workers, now carries a $19-million deficit. That too is in jeopardy.
Their biggest liability is a $71.9 million debt owed to a syndicate of three banks, for which NTCL is now in default.
A court document says that debt is secured not only by virtually all of NTCL’s assets but also by “many of the wholly owned subsidiaries of Norterra.”
That means those wholly-owned subsidiaries may find themselves also on the hook for that debt. The list of affected companies is secret right now, and NTCL has asked the court to keep it secret for good by sealing the relevant documents.
One of those wholly-owned subsidiaries is the Canadian North airline. This raises the possibility that if NTCL’s restructuring efforts are not successful, Norterra-owned Canadian North, one of northern Canada’s most important airlines, could also find itself in financial jeopardy.
In addition to that enormous bank debt, the documents reveal the IDC has poured $32.39 million worth of Inuvialuit beneficiaries’ money into NTCL, in the form of loans — with no fixed terms of repayment.
The big losers in all of this are the hapless beneficiaries of the Inuvialuit land claims agreement. Tens of millions of dollars worth of collectively-owned Aboriginal wealth is likely to be incinerated before this fiasco plays itself out.
Other losers include the company’s unionized employees, whose pay and benefit packages are likely to suffer reductions after the restructuring is completed.
There’s one group that won’t lose out, however. NTCL proposes to pay bonuses to eight “key employees,” presumably senior managers. Through a plan called “KERP,” short for “Key Employee Retention Plan,” they’ll get bonuses worth 10 per cent to 25 per cent of their salaries.
The damage to Nunavut, however, may be less than it might have been.
That’s because Nunavut’s Nunasi Corp., in a rare display of good sense, unloaded its interest in Norterra in 2014. And businesses and residents of communities in Nunavut’s Kitikmeot region now enjoy reliable marine shipping alternatives: the Montreal-based Nunavut Sealink and Supply Inc. and Nunavut Eastern Arctic Shipping Ltd.
NTCL, however, still offers a vital resupply service to numerous communities in the Northwest Territories and parts of the Western Arctic, through its Hay River-based barge service.
For that reason alone, the dying company has to be kept alive, and to that end, the IDC proposes to pour another $9.3 million worth of credit into NTCL to keep the company operating this year.
What a comedown. In its 1994 annual report, the IDC bragged that NTCL, with 320 workers, was the largest private sector employer of Aboriginal people in the Northwest Territories, which then included what is now Nunavut. That year, their fleet comprised 17 tugs and 134 barges.
Their fleet is now reduced to 12 tugs and only about 60 barges, many of which are under a lease agreement they can’t make payments on anymore. Their workforce has shrunk to 17 full-time employees and 150 seasonal workers during the five-month shipping season.
When Brian Mulroney’s Progressive Conservative government sold NTCL to Norterra in 1985, it’s clear that they succeeded in privatizing a bloated, unprofitable mess of a company that never performed as promised.
But why did it get worse? One inescapable factor is governance. For the past 31 years, Norterra’s Inuit and Inuvialuit owners kept their beneficiaries in the dark about the financial condition of NTCL and numerous other companies they controlled and in some cases, still control.
Norterra was born in an era when Aboriginal birthright corporations were expected to make major contributions to the economic development of northern Canada.
But, for the most part, the performance of these birthright companies has been disappointing in the extreme — with the Makivik Corp.-owned First Air and the Inuvialuit-owned Canadian North airlines ranking, along with NTCL, among the worst examples.
Will those cash-strapped companies also degenerate into insolvency? We don’t know. By their own admission, those two widely reviled airlines have lost money for years.
But one thing is certain. If they do go under, their Aboriginal beneficiaries will be last to find out. JB