ACOA writes off balance of two multimillion-dollar loans to Irving company
The decision was taken because "the required milestones for repayment had not been achieved," said ACOA spokesperson
FREDERICTON – An Irving-owned company is off the hook on repaying the balance owed on two multimillion-dollar federal loans it received to open a drywall plant in Saint John, N.B.
The two conditionally repayable loans, totalling $7.4 million, were issued in 2011 and 2012 under an Atlantic Canada Opportunities Agency program aimed at offsetting the impact of the closing of the Irving-owned Saint John shipyard.
According to a government memo dated March 27, Atlantic Wallboard LP, a subsidiary of East Coast business giant J.D. Irving Ltd., met its obligations under the terms of the loan agreement.
“Contributions under (the agreement) were conditionally repayable, based on project success, with repayment commencing only after the recipient demonstrated a net income related to the project,” the memo reads.
It says repayment scenarios in the agreement “were not designed to require full recovery of the contributions, but rather to mitigate the risk of significant windfall profits accruing to the client without ACOA first being repaid.” The loans were in the amounts of $6,150,000 and $1,255,000.
“In the case of these projects, the contributions will never be fully repaid …. No further payment is due under the terms of the contribution agreements,” the memo reads.
ACOA vice-president Kent Estabrooks recommended closing the file, and agency president Francis McGuire agreed.
As of February 2018, the company had repaid $540,000 of the principal on the two loans, but it’s unclear if any more was paid, because the final repayment amounts have been redacted from the memo.
In a statement Wednesday, ACOA spokesperson Sharon Stanford-Rutter said the Irving Group of companies matched every dollar invested by the federal government.
“The decision to close these two files is an administrative action undertaken by ACOA,” she said. “The decision was taken because the required milestones for repayment had not been achieved.”
The plant is on the site of the former Saint John Shipbuilding Ltd., where many of the Canadian Navy’s frigates were built.
Overcapacity had been a recurring problem for shipyards in the country. In 2003, the federal government said it would provide up to $55 million to help redevelop the site.
Mary Keith, vice president communications for J.D. Irving Ltd., said Wednesday that under the funding agreements, Saint John Shipbuilding had to commit to permanently close the shipyard and agree not to build ships at the site for at least 15 years.
“The program required matching dollar-for-dollar investment from the owners in any new business on the site. The Atlantic Wallboard investment was almost double the investment required under the ACOA program,” Keith wrote in a statement.
“The plant opened in 2008 as the collapse of the U.S. housing market and great recession were beginning. Atlantic Wallboard kept the operation running. Today the plant employs over 100 people.”
In total, Atlantic Wallboard got more than $40 million in funding from ACOA under the shipyard redevelopment fund, but the company was not required to repay at least $35 million.
Atlantic Wallboard is part of a conglomerate of Irving’s forestry, shipbuilding, and oil and gas companies founded in the late 1800s.