NTCL says 'drastic' overhaul is 'long overdue' after near-decade of losing money
Company is working to ensure 2016 community resupply service goes ahead
Northern Transportation Company Limited (NTCL) says a "drastic" overhaul of its operations is "long overdue" after nearly a decade of losing money.
NTCL provides shipping services to communities and exploration projects throughout the N.W.T. and across the western Arctic. Many communities along the Mackenzie River rely on NTCL barges for cargo drops over the summer months.
On Wednesday the Edmonton-based company received court protection in Alberta from its creditors as it looks to file a plan for how to restructure the company in the months to come.
"This was a very difficult decision and we looked at all available options and ended up concluding that this was the best path forward for the company," said Nathan Graham, the chief corporate officer for the Inuvialuit Regional Corporation, which wholly owns NTCL.
While Graham said it's "possible" NTCL could reduce the number of resupply trips to individual communities during the 2016 sailing season, he said "at this point we're not sure" if layoffs will be necessary.
NTCL has regional terminals in Inuvik, Tuktoyaktuk and Norman Wells and operational headquarters in Hay River, with employment peaking during the summer shipping season.
"Our employees are at the top of our mind for trying to make sure we treat everyone fairly," said Graham.
As for whether cargo rates could go up: "[Our priority] is not to try to raise rates to try to squeeze every last dollar out of it."
According to the company's website, "the 2016 sailing schedule and rates will be posted soon." Typically, that occurs in mid-May.
Oil and gas slowdown, low water blamed
Graham said NTCL hasn't turned a profit for close to a decade, and that the slowdown in Northern oil and gas work and low water levels in the Mackenzie River have hit the company particularly hard in the last year and a half.
"Climate change issues have impacted the company, including low water levels on the Mackenzie River, which has caused problems with navigability over the last several years, which impacts our ability to do what NTCL does," said Graham.
Asked if past management decisions also account for the position the company is in, Graham said, "Rather than looking backwards in terms of decisions that have historically been made and trying to undo them, we're trying to find a way to deal with the situation that the company is in today."
Graham said the Inuvialuit Regional Corporation — which bought out Nunasi Corporation's share of NTCL parent company NorTerra in 2014 — has invested millions of dollars into NTCL in recent years.
"Unfortunately we're at a position in time where the combination of all the factors...as well as the significant financial impact... make it unsustainable to support this company in its current form."
The news about NTCL took the mayor of Norman Wells by surprise.
"We're a bit shocked," said Nathan Watson.
"NTCL is a critical part of our resupply, especially of heating fuel. We've got a couple of major projects planned for this summer that will hinge entirely on their ability to deliver the supplies that are needed for that."
Inuvik Mayor Jim McDonald was also shocked.
"Inuvik can certainly survive through other means," he said, nodding to the overland supply route offered by the Dempster Highway.
But, he added, "I don't think the territory can survive without [NTCL]."
Brad Mapes, the mayor of Hay River, said that while he knew there were issues, the news was still unexpected.
"NTCL is a huge employer for our community," he said.
"We need to figure out a way we can make this feasible, to be profitable."
According to a news release, NTCL will continue to operate under protection from the Companies' Creditors Arrangement Act (CCAA).
Filing for protection under the CCAA allows NTCL time to restructure its finances with the assistance of a court-appointed monitor. The Court of Queen's Bench of Alberta granted NTCL protection under the CCAA for an initial period of 30 days.
Court-appointed monitor PricewaterhouseCoopers Inc. will "oversee NTCL's ongoing operations, liaise with creditors and other stakeholders, and assist with development and filing of a formal plan of arrangement or compromise and attend to all court proceedings pursuant to the CCAA."
Sean Fleming, senior vice-president of consulting and deals for PricewaterhouseCoopers, says the next likely step in the legal process would see NTCL apply for an extension to its initial 30-day protection period.