Emera writes off $8.8M investment in Atlantic Hydrogen
New Brunswick government maintains confidence in Fredericton company
A New Brunswick government spokesperson says the province still "feels good" about its multi-million dollar support of a Fredericton hydrogen company despite a major shareholder writing off its entire investment this week.
On Monday, the Nova Scotia energy company Emera revealed in a financial disclosure that it was writing off its $8.8 million investment in Fredericton's Atlantic Hydrogen Incorporated (AHI), just weeks after Premier David Alward announced $950,000 in new funding for the company.
Emera said the decision was taken in the fourth quarter of 2013 and has given only vague reasons for downgrading Atlantic Hydrogen's worth.
"The Company determined an impairment charge was appropriate as AHI’s path to commercialization is less certain," Emera wrote in financial statements released this week.
That's not the message delivered by government and AHI just four months ago.
The company has been working for years to develop a technology to separate carbon from natural gas and has long been a darling of economic development in New Brunswick. It won a $2 million grant from the former Liberal government of Shawn Graham in 2009 before securing more money from the Alward government last October.
At the time, Premier Alward said the company's innovations were on the verge of securing customers and making money.
“Our investment will help rebuild New Brunswick's economy and bring a new made-in-New Brunswick technology to the global market,” said Premier Alward.
Emera is the largest shareholder in AHI and fairly soon after the premier's announcement it came to the conclusion that commercialization is less certain.
New Brunswick NDP Leader Dominic Cardy, a long time opponent of government picking out specific companies to receive grants, says it's hard to understand how the province could believe AHI was a winning investment so close to such a serious devaluation by its main shareholder.
"It reminds me a little of the Atlantic Lottery Corporation and their idiotic investment in that Geo Sweep game. At the same time they were announcing their business model was failing we were busy pushing more money out the door towards them."
AHI has been working since last fall to build and test a commercial-sized version of its carbon removal technology at Emera's natural gas generating station in Saint John. AHI president David Wagner acknowledges there have been some delays in that project but suggests Emera's dramatic write down of his company's worth is simply an attempt to dampen its profits and lower its year end tax bill.
"This is not easy," Mr. Wagner said of efforts to get AHI's technology into the market.
"There is definitely uncertainty. My position on it (Emera's write down) is that it is more of an accounting transaction given the excellent results they had in 2013."
The write down will save Emera $1.2 million in taxes but spokesperson Sasha Irving disputes that had anything to do with the decision. She says Emera supports AHI, hopes it succeeds and still sits on its board of directors, but devaluing its investment in the company was a "prudent" and "conservative" accounting assessment of AHI's real worth.