2 multimillion-dollar loans to Irving company forgiven by ACOA
ACOA president Francis McGuire approves the closure of the two files
The federal government has written off the balance of two multimillion-dollar loans given to Irving-owned Atlantic Wallboard in Saint John.
The Atlantic Canada Opportunities Agency closed the file on the two loans in March after deciding that the full amount "has not been and likely will never be repaid," according to a memorandum obtained by CBC News.
The two loans, called "conditionally repayable contribution agreements," were worth a combined $7.4 million. They were made under ACOA's Saint John Shipyard Adjustment Initiative.
In the March 27 memo, ACOA vice-president Kent Estabrooks says the company "has fulfilled their obligation to repay according to terms of their contribution agreements," though it hadn't repaid the full amount.
He recommended that agency president Francis McGuire approve the closure of the two files.
Amount repaid not known
"The contributions will never be fully repaid," Estabrooks wrote. McGuire approved the recommendation with his signature.
The memo says Atlantic Wallboard only had to start repaying the loans when it "demonstrated a net income related to the project" but that didn't necessarily require the entire amount.
ACOA released the memo in response to an access to information request. The agency redacted the precise amount that had been repaid.
Agency spokesperson Sharon Stanford-Rutter said there's still $9.9 million "outstanding" under the shipyard program from Bayside Realties, another Irving company.
"ACOA is continuing its due diligence on the $9.9 million to determine if any amounts are repayable," she said.
J.D. Irving Ltd. spokesperson Mary Keith said in an email that Atlantic Wallboard "fulfilled its obligations" under four loans it received from ACOA.
Keith said in an email statement that the company, which makes gypsum drywall, built "the most modern plant in Canada" and has grown to 100 employees, "despite weathering the great recession and collapse of the U.S. housing market."
Loans followed Irving's closure of shipyard
The two loans were part of a $55 million federal program launched in 2003 to cushion the economic impact of J.D. Irving Ltd. closing its shipyard in the city. Ottawa established the program after Irving centralized its shipbuilding business in Halifax.
At the time the initiative was announced in 2003, Irving said it would not receive any of the federal funding until it matched it with its own money.
In a 2006 report, ACOA said an initial $4 million had been earmarked for a feasibility study to find a new use for the site and said that would be increased to $9.9 million. That's the amount still outstanding.
ACOA then provided Irving with a total of $42.4 million to help establish Atlantic Wallboard. The first loan, for $35 million, wasn't repaid because the company didn't achieve certain targets, ACOA said.
The two subsequent loans, the ones written off this year, were for $6.1 million issued in March 2011 and $1.2 million issued in March 2012.
'Full recovery' of loans not required
An ACOA spokesperson told The Canadian Press last year that the company had repaid $540,000 of those two loans and that any repayment meant "that the company has met the required milestones for repayment for those years of operation."
But ACOA is now refusing to say how much of the loans had been repaid when the files were closed in March.
The memo says the two funding agreements weren't designed to require "full recovery" but to reduce the risk that Atlantic Wallboard would reap "significant windfall profits … without ACOA first being repaid."
The Saint John Shipyard Adjustment Initiative was controversial when it was announced in 2003.
Then-Liberal industry minister Allan Rock, responsible for ACOA when the funding was approved, had accepted a free family vacation at the Irving fishing camp on the Restigouche River during his time as health minister.
Federal ministers were not allowed to accept gifts worth over $200 under the rules in place at the time.