NLRC proposal asks creditors for time

Barbara
Barbara Dean-Simmons
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Finance

The future of a proposed refinery for Placentia Bay is in the hands of its creditors.

In a "community stakeholder update" issued Wednesday, Newfoundland and Labrador Refining Co. (NLRC) president Brian Dalton said the company had "put forward a proposal that is designed to preserve the value of the government permits and community level support that has been granted."

The idea, Dalton explained in a news release, was to "give the project a life beyond the current financial turmoil to see if it can, in fact, attract the money it needs in a more normal business world.

Clarenville - The future of a proposed refinery for Placentia Bay is in the hands of its creditors.

In a "community stakeholder update" issued Wednesday, Newfoundland and Labrador Refining Co. (NLRC) president Brian Dalton said the company had "put forward a proposal that is designed to preserve the value of the government permits and community level support that has been granted."

The idea, Dalton explained in a news release, was to "give the project a life beyond the current financial turmoil to see if it can, in fact, attract the money it needs in a more normal business world.

"We ... crossed big river after big river only to find the last one in once-in-a-hundred-year flood conditions," he stated, in reference to the current financial crisis that has rocked stock markets around the world.

According to Dalton, the company's proposal recognizes it will take time for world financial markets to stabilize to give the proposed refinery a fair chance for investment.

NLRC cleared several hurdles in the past few years, trying to clear a path to build a new refinery. The environmental assessment process is complete, giving the project the go-ahead to obtain permits.

However, financing has proved to be a stumbling block.

Just as the environmental process was complete, the sub-prime mortgage crisis in the United States created a domino effect, toppling major financial institutions in America and making it more difficult to find investors for the multibillion-dollar project.

Earlier this year, SNC Lavalin filed a statement of claim against NLRC, alleging it had not been paid for the consulting work it had done for the company.

NLRC has filed a statement of defence and that matter is still pending a court process.

According to NLRC, the Nov. 6 meeting of creditors was held to vote on the company's proposal.

"The voting process involves the submission of proof of claim amounts to an independent trustee; from these the amount of respective creditor voting rights is determined."

The vote, however, never materialized.

In a news release Nov. 7, Dalton said the trustee objected to three of the submitted claim amounts.

"NLRC then provided a summary update to creditors with respect to the company's continuing efforts to attract investment to the project."

According to Dalton, NLRC has recently had new expressions of interest in the project.

Dalton could not be reached for comment.

According to his news release, the creditors adjourned the meeting to consider the claims further and/or seek court direction.

"Another update will be provided once the result is known," his release states.

If the creditors vote against NLRC's proposal, the company will be declared bankrupt.

Dalton noted in his news release, "This will very likely spell the end of the project journey."

But he indicates that if the proposal is accepted, creditors would be entitled to all they would achieve through a bankruptcy.

Tangible assets would be sold in order to pay down whatever portion of claims that can be satisfied by the proceeds.

What NLRC is hoping to do is maintain the company as an entity, thereby saving its intangible assets - the environmental and community approvals for the project.

"If our proposal succeeds, this value can be preserved for the potential future benefit of all, including the creditors," Dalton explained.

"Notably," he adds, "the secured creditor has indicated that if the proposal is accepted by the unsecured creditors, it will agree to leave enough money in NLRC to allow it to continue its search for required capital for up to the next three years."

The Packet

Organizations: Newfoundland and Labrador Refining Co., SNC Lavalin

Geographic location: Clarenville, Placentia Bay, United States

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Comments

Recent comments

  • Edward
    July 02, 2010 - 13:25

    SNC is a Quebec company, so their good will should have been doubted from the start. It also puts Mr. Dalton's judgement in doubt as well in that he (and his board) were prepared to take on SNC as a contracting counterparty. There are other competent Canadian-based Oil and Gas EPC service providers that were able to fill the bill on this project and still maintain good faith. Let's face it, Quebec is pretty much able to have it's way in N&L, mostly because we let them. By the way, The Telegram and much of the rest of the print media in N&L is owned by a Quebec company.

  • The
    July 02, 2010 - 13:13

    Lets see here. They have SNC after them. SNC is behind the 8 ball in New Brunswick with the Repsol Canaport LNG project. Both Hatch and SNC were in the trenches fighting for both Long Harbour and the expansion here.

    Looks like good drama at the costs of the people of Newfoundland once again.

    Just get over it. People need employment, and the province needs growth. Might be time to use Danny's oil bucks to create growth and employment by investing in the province for a change. Pretty clear the outsiders can not do it alone.

  • Tim
    July 02, 2010 - 13:12

    Just a little more good news on the oil front..

    NL Exports to Decline as Oil Prices Drop, says EDC
    (2008-11-13)

    Newfoundland and Labrador's international exports are expected to decline by 13 percent in 2009 in tandem with an expected drop in oil prices, according to a provincial export outlook released by Export Development Canada (EDC) on Tuesday.

    Newfoundland and Labrador are blessed with significant oil resources, but as such, they ride the roller coaster of commodity prices set in the global marketplace. This is the key driver behind the big drop in the province's exports in 2009, said Peter Hall, vice-president and chief economist, in a statement.

    The energy sector accounts for 73 percent of the provinces international export picture. EDC is forecasting a 33 percent increase in energy exports this year, to be followed by a 19 percent drop next year in line with an expected drop in oil prices.

    Prices aren't the only story in the energy sector forecast, continued Mr. Hall. Newfoundland's crude production hit a record 134 million barrels in 2007, but the volume of the output will be lower in 2008 and 2009.

    Overall, EDC forecasts WTI crude to average US$84 per barrel in 2009, after averaging US$110 per barrel in 2008.

    Canadian exports are forecast to grow by 2 percent this year before declining 1 percent in 2009. The Canadian economy is expected to grow by 0.9 per cent in 2008 with a slight upturn to 1.4 per cent in 2009.

    EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business.

    Guess Danny's oil bucks are takin a beating along with any expansion plans ;(

  • Edward
    July 01, 2010 - 20:11

    SNC is a Quebec company, so their good will should have been doubted from the start. It also puts Mr. Dalton's judgement in doubt as well in that he (and his board) were prepared to take on SNC as a contracting counterparty. There are other competent Canadian-based Oil and Gas EPC service providers that were able to fill the bill on this project and still maintain good faith. Let's face it, Quebec is pretty much able to have it's way in N&L, mostly because we let them. By the way, The Telegram and much of the rest of the print media in N&L is owned by a Quebec company.

  • The
    July 01, 2010 - 19:51

    Lets see here. They have SNC after them. SNC is behind the 8 ball in New Brunswick with the Repsol Canaport LNG project. Both Hatch and SNC were in the trenches fighting for both Long Harbour and the expansion here.

    Looks like good drama at the costs of the people of Newfoundland once again.

    Just get over it. People need employment, and the province needs growth. Might be time to use Danny's oil bucks to create growth and employment by investing in the province for a change. Pretty clear the outsiders can not do it alone.

  • Tim
    July 01, 2010 - 19:49

    Just a little more good news on the oil front..

    NL Exports to Decline as Oil Prices Drop, says EDC
    (2008-11-13)

    Newfoundland and Labrador's international exports are expected to decline by 13 percent in 2009 in tandem with an expected drop in oil prices, according to a provincial export outlook released by Export Development Canada (EDC) on Tuesday.

    Newfoundland and Labrador are blessed with significant oil resources, but as such, they ride the roller coaster of commodity prices set in the global marketplace. This is the key driver behind the big drop in the province's exports in 2009, said Peter Hall, vice-president and chief economist, in a statement.

    The energy sector accounts for 73 percent of the provinces international export picture. EDC is forecasting a 33 percent increase in energy exports this year, to be followed by a 19 percent drop next year in line with an expected drop in oil prices.

    Prices aren't the only story in the energy sector forecast, continued Mr. Hall. Newfoundland's crude production hit a record 134 million barrels in 2007, but the volume of the output will be lower in 2008 and 2009.

    Overall, EDC forecasts WTI crude to average US$84 per barrel in 2009, after averaging US$110 per barrel in 2008.

    Canadian exports are forecast to grow by 2 percent this year before declining 1 percent in 2009. The Canadian economy is expected to grow by 0.9 per cent in 2008 with a slight upturn to 1.4 per cent in 2009.

    EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business.

    Guess Danny's oil bucks are takin a beating along with any expansion plans ;(