NEWFOUNDLAND AND LABRADOR REFINING CORPORATION
MEDIA - 2008-11-16
The Packet - It's up to the creditors - NLRC proposal asks for time
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 Company (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."
Dalton explained in a press 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-100 year flood conditions," he stated, in reference to the current financial crisis that has rocked stock markets around the world."
Dalton, the company's proposal recognizes it will take time for world financial market 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 multi-billion project.
Earlier this year, SNC Lavelin 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 on 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."
Dalton, NLRC has recently had new expressions of interest in the project.
Dalton could not be reached for an interview on Monday.
According to his press 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 Nov. 5 press release, "This will very likely spell the end of the project journey."
He indicates, if the proposal is accepted, however, 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,"
"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."