BIXI's 'financial difficulties' a concern for Toronto
Councillor says company struggling to make loan payments
The company that operates Toronto's public bicycle program is having "financial difficulties" that have been brought to the attention of the city's executive committee.
Coun. Denzil Minnan-Wong told reporters Tuesday that BIXI Toronto Inc., is having trouble meeting its debt obligations.
"My understanding is that we gave them a loan guarantee and they're borrowing money, but they can’t make the payments on the loan, and that’s a significant obstacle to them at the current time," Minnan-Wong said.
A report from city staff says the company's debt load is "unsupportable" and it had cash-flow issues during the winter months.
"It's my understanding that (BIXI) has been asked to divest a lot of their assests. The production of bikes and other pieces," said Coun. Mike Layton.
Toronto provided a guarantee for a 10-year loan to BIXI of up to $4.8 million, so that the company could pay for the bicycles and stations that have been set up around the city's downtown core.
BIXI would eventually borrow $4.5 million, and according to the staff report, its loan balance stood at $3.9 million at the end of December.
The CBC's Natalie Kalata reported that councillors said the city might have to take over the program, or find a private buyer.
'1,000 bikes is not enough'
The company's interim CEO Michel Philibert isn't commenting on the financial concerns, but said BIXI Toronto needs more bikes stations to be profitable.
"For Toronto, a system of 1,000 bikes is not enough," Philibert said. "If we expand the system we will get more memberships, and more people will use BIXI, and also be able to generate some economy of scale in terms of operation."
The public bike sharing system currently maintains 80 stations in an area stretching north from Queens Quay to Bloor Street, and between Parliament Street and Bathurst Street.
By comparison, Montreal's program that was launched two years prior to Toronto's currently has 5,120 bikes at 411 stations.
In an effort to protect the city from any financial impact, staff has prepared confidential advice on the options the city may pursue toward revising its agreement with BIXI.
The executive committee will consider that advice at a meeting next week.