With no buyer in sight, NTCL looks to cut pension payments
$100M pension fund is short $20M; union calls attempt to cut back 'atrocious'
As its financial pressures mount, Northern Transportation Company Limited says it wants to cut back on pension payments for over 600 current and former NTCL employees.
This afternoon in an Alberta courtroom, lawyers for the embattled Northern sealift company will argue that it should no longer have to make special monthly payments of $229,000 into the NTCL pension fund.
The payments, which began in 2011 and which come on top of NTCL's regular pension payments, are meant to make up for a shortfall in the pension fund, whose assets are valued at around $100 million but are still short about $20 million.
NTCL's court application comes after its recent admission that it is "highly unlikely" the company will find a successor to take over its business, even going so far as to partially blame the pension fund for making NTCL unattractive to bidders.
"Pensioners will not be left without a pension in the future," Kyle Barsi, NTCL's vice president of finance, wrote in a Aug. 8 affidavit.
"Unfortunately, I also believe that the existence of the pension plan was a significant impediment to identifying a purchaser who wished to continue the business of NTCL in the manner in which it has historically operated."
Union calls NTCL's move to cut payments 'atrocious'
The Union of Canadian Transportation Employees, which represents 49 NTCL workers — many of whom live in Hay River, NTCL's operating base — is calling the company's move "atrocious."
"The employees should be the first ones compensated before any creditors," said Teresa Eschuk, the regional vice president representing NTCL members.
Those creditors include a syndicate of banks owed a total of $130 million.
The NTCL pension fund covers 622 workers, including 83 people who still work for the company. Just under 50 of those people are represented by UCTE.
The union has hired Koskie Minsky LLP, the same firm that has attempted to help former employees of Nortel reap their pension benefits since that company went bankrupt.
"At one point in time, and I'm not talking that long ago, this pension plan had a surplus of over $20 million. My question is, what happened to it?" said Eschuk.
"Do I believe it's the workers' fault or the union's fault or the pension plan that's caused the demise of this company? No, absolutely not."
The 'Cadillac' of pensions
There are also around 40 retired NTCL pensioners still living in Hay River, including Mark Lyon.
A 30-year NTCL employee, Lyon began as a labourer before advancing to a post as senior electrician. He also served as a union president until he retired a few years ago.
Lyon is the first to admit that long-time pensioners like him will hardly starve if NTCL is allowed to stop the special payments.
"We had a Cadillac pension, and we knew we did," said Lyon, citing a monthly pension cheque for himself north of $3,000.
But he says the pension was part of the reason the company was able to entice employees back year after year, despite 12-hour days and seven-day work weeks during the summer shipping season.
That work did not come without significant sacrifices, he says.
"I thought back to the stuff I've done and the trips that I took, to Tuktoyaktuk and Churchill, and I believe that I was probably there for maybe half of my daughter's birthdays. Her birthday is July 2."
Both Eschuk and Lyon fear the worst for Hay River if NTCL collapses.
"I talked to one [fellow pensioner] today: he's pulling up stakes. He's leaving," said Lyon. "With the cost of living and everything, to have your pension reduced in the North is an expensive proposition."
"It's not a very big community. Where are these people supposed to get work unless they leave?" said Eschuk of current employees.
Inuvialuit owners no longer willing to pay
NorTerra, the Inuvialuit-owned, Edmonton-based holding company that controls NTCL, also has current and former employees under the pension, although NTCL's court action does not affect those plan members.
NTCL says the Inuvialuit Development Corporation — which owns both NTCL and NorTerra — is no longer willing to pay the special payments.
At the same time, the corporation has, through NorTerra, lent NTCL $32.4 million in recent years, with no fixed term of repayment.
Barsi framed the move to cut payments as an unfortunate choice.
"While NTCL regrets taking this step, it is necessary in the circumstances to ensure the process is fair and that no party receives a preference with respect to the assets of NTCL," Barsi wrote.
In an email sent to CBC Thursday, Mark Fleming, NorTerra's vice president, wrote, "We would like to assure plan members and beneficiaries that they remain top of mind."