The Prince Rupert Grain Terminal may not be able to meet a mortgage payment of $20 million this year.
The terminal owes a full principal payment of $4.25 million and an interest payment of $16 million on Nov. 1, 1999. The loan was provided by the government of Alberta Heritage Saving Trust Fund.
A smaller portion of the loan will be repaid this fall and the interest owing will be capitalized into the loan, said an Alberta government spokesperson.
“This is not classified as a default. They’re not in violation of their contract,” said Cliff Weber of Alberta Agriculture.
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The loan contract allows deferred payments. The contract is structured like a traditional mortgage and comes due in July 31, 2015. The interest is 11 percent per year.
Prince Rupert’s general manager refused to comment on whether the company would be able to make the Nov. 1 payment.
“We do not comment on the financial status or statements of our company … nor do we make public statements about our actual operating income from year to year,” said Jeff Burghardt.
But he said it has been a difficult operating year for the terminal because west coast grain exports are down significantly. And he said while the facility continues to perform well in day-to-day operations, it needs to look at restructuring its debt.
“We have a large long-term debt servicing cost that is one of the factors that makes this facility, as well as the corridor, an uncompetitive place to ship grain when there are limited supplies.”
The terminal closed for the third time in four years at the end of February 1999 and has not reopened. Prince Rupert was hurt by economic trouble in Asia and low commodity prices worldwide. Wheat shipments this year fell 35 percent and coal shipments were down 27.8 percent, says a Statistics Canada report.
The Prince Rupert terminal was built for $289 million. Alberta provided 80 percent of the financing to ensure adequate export space for Alberta grain. Ridley Grain Co. Ltd., the official borrower, holds the terminal assets as trustee for the five grain companies that own the facility. Those owners include Saskatchewan Wheat Pool, Agricore Co-operative, Cargill Ltd., United Grain Growers and James Richardson International.
Burghardt said there is an ongoing dialogue with the government of Alberta about restructuring debt, but he wouldn’t comment on what those discussions entailed.
