Alberta to Alaska rail project files for creditor protection after lender goes into receivership
Ontario Securities Commission found financial irregularities in founder's dealings with lender
A2A Rail, the corporation pledging to build a $22-billion freight railway connecting Alaska and Alberta, has filed for creditor protection.
The Calgary-based company said the protection will allow it to pursue a court-supervised sale or refinancing of the development stage of the project, after its main lender, Bridging Finance, was placed in receivership in April.
"Earlier this month, the court appointed receiver of Bridging Finance, PriceWaterhouseCoopers, called a $149-million loan made to A2A by Bridging Finance. To protect against the company's assets being liquidated, A2A obtained creditor protection late Friday," the company said in a release Wednesday.
Questions surround company's founder
A2A Rail said the refinancing process will not involve company founder Sean McCoshen and instead will be driven by a third-party consultant.
An investigation by the Ontario Securities Commission found numerous financial irregularities surrounding McCoshen's dealings with Bridging. The founder's name has been removed from A2A Rail's website.
According to the commission's investigation, one of McCoshen's companies made $19.5 million in undisclosed payments to the personal chequing account of Bridging's CEO, David Sharpe, during the same period that Bridging loaned more than $100 million to McCoshen's other companies.
Millions of dollars pledged for A2A rail also went to McCoshen's personal bank account and to an apparently unrelated company controlled by him.
Sharpe closed his personal account just days after commission enforcement staff questioned him about his relationship with McCoshen.
The receiver also alleged that Sharpe asked an employee at Bridging to delete emails containing the search term "Sean McCoshen." Sharpe has since been removed from his position by the receiver.
A Globe and Mail investigation has also raised questions about McCoshen's dealings, describing the Winnipeg businessman as having a "vague and unverifiable resume" and as someone who is followed by controversy.
A2A Rail said despite its lender's receivership, the company continues to believe its plan is sound. It continues to work toward full financing.
CBC News has reached out to A2A Rail and McCoshen to request an interview but has yet to receive a response.
In September 2020, then U.S. president Donald Trump issued a permit granting approval for the 2,570-kilometre rail project. If built, it would connect Fort McMurray, through the Northwest Territories and Yukon, to Delta Junction in Alaska, where it would connect with existing rail and continue to ports near Anchorage.
The company had estimated the project could be moving cargo, or even passengers, by 2026.