How funding university research could mean less debt for Cooke Aquaculture
Company able to write off up to $2 million for funding research at university, reducing its debt
Cooke Aquaculture's funding of research at Dalhousie University is allowing the company to write off up to $2 million from a $16-million loan from the Nova Scotia government.
The company used a portion of the 2012 loan to fund a research program at Dalhousie led by oceanographer Jon Grant. That money is being deducted from its indebtedness.
"Some portion of that loan was allowed to be paid into research dollars rather than back to the the province," Grant said.
The big provincial government loan was part of an ambitious expansion announced by Cooke in June 2012 that has largely fizzled.
The promised salmon-processing plant in Shelburne, N.S., with 320 jobs, a new hatchery in Digby and a feed-mill expansion in Truro never materialized.
The company blamed a moratorium on new salmon farms imposed in 2013 by Nova Scotia's then-NDP government, which had bankrolled the expansion less than a year before. The moratorium was lifted several years later by a Liberal government.
$1.2M in Cooke research from loan
But university research funded by the loan to Cooke continued despite the moratorium.
An initial $800,000 payment from the loan established the Natural Sciences and Engineering Research Council – Cooke Aquaculture industrial research chair in sustainable aquaculture in 2014.
Grant said in 2016 he received $1.2 million more from the Cooke loan as part of a three-year extension on his council research program.
Grant said the money was used to hire a professor, assist graduate students and carry out more advanced study on the operational impacts and management of salmon farming.
Today, 10 people are working on the project.
The Cooke loan also leveraged other sources of funding.
"So of the $2 million we've been able to match that into $1.5 million of net federal dollars into Dalhousie, most of which is used in salaries," Grant said.
Company applied for forgiveness in December
The business website allNovaScotia.com first reported, after receiving heavily redacted documents under freedom of information legislation, that in December Cooke applied to the province, and later received approval, for the loan forgiveness.
The documents blank out how much forgiveness Cooke was seeking and how much it has received.
A ministerial briefing note said the province conditionally approved loan forgiveness in 2013 and 2015.
Minister of Business Geoff MacLellan said he's frustrated that confidentiality terms in the loan prevent him from revealing more.
"Certainly it's something we're not happy with," MacLellan said.
The Liberal government scrapped the jobs fund which was used for the assistance to Cooke.
"It's certainly a problem when you have details you can't share with the public," MacLellan said.
The June 21, 2012, government news release that accompanied the Cooke funding disclosed that $4 million of the $16-million interest-bearing loan could be forgiven based on "research, development, and commercialization of innovation in the aquaculture industry."
The loan was part of an overall $25-million package that also included $2 million paid out to Cooke for new fish farms. The company paid that back.
According to the documents released under freedom of information, $7 million was never disbursed and was rescinded in 2016.
The auditor general in 2013 harshly criticized the package, noting there was no security for the loan, the net economic benefit to the province was "negligible" and 50 per cent of the loan is not repayable until 2022.
A Cooke spokesperson said the loan forgiveness is old news given that the R and D repayment option was publicly described back in 2012.
"As a result of this provision, there is a long list of positives realized — including but not limited to research, innovation, commercialization and jobs for Atlantic Canadians," Cooke Aquaculture spokesman Chuck Brown said in a statement.
Brown declined to answer how much money the company was looking to have forgiven, nor would he answer whether the company is committed to the projects funded by the $16-million loan.
Cooke still on for expansion
Back at Dalhousie, Grant said he expects Cooke to move forward.
"I can say, as far as I know, they have plans to implement all of those ideas and projects that we had originally talked about and plans to expand fish farming," Grant said.
Grant said the company does not "dictate" the research projects worked on by he and the team at Dalhousie.