Recession | Help for company not exactly a secret

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By STEPHEN LLEWELLYN
llewellyn.stephen@dailygleaner.com

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Ending weeks of speculation, the Liberal government on Wednesday announced three loan guarantees worth $50 million for Miramichi-based Atcon Construction Inc.

But acting Business New Brunswick Minister Jack Keir said the money isn't a bailout.

He also said the government isn't providing cash to the construction company at the expense of the province's education system, which was cut by $24 million this year.

"The fact of the matter is there is not one dime going to Atcon," said Keir.

As long as the company remains successful and continues to grow, the financial aid will not cost taxpayers anything, Keir said, adding it was like co-signing for a home mortgage.

"So when the Opposition stands up like they always do and say you are giving $50 million to Atcon when you could be paying teachers and teachers aides, that is just hogwash," he said.

Keir said many Canadian companies are being forced to cut costs and lay off staff because conventional lenders aren't providing access to working capital credit they way they did before the credit crunch started last fall.

He said the government has provided loan guarantees to other companies including: J.D. Irving, Ocean Pier in Scoudouc, CE3 in Dieppe, T.S. Simms in Saint John and Barrett Xplore, based in Woodstock.

Premier Shawn Graham said Wednesday during question period that Miramichi has been hard hit by the economic slowdown and mill closures.

"I can tell you today that our government believes in the Miramichi," Graham said. "That is why, today, we have put in place a $50-million loan guarantee to support a business that has been in operation for over 30 years, employing over 1,800 people in that region."

The government's financial assistance comes with new conditions that include: establishing an external advisory board with government representation, repaying any money owed to New Brunswick suppliers and not bidding against New Brunswick companies for government contracts.

He said 95 per cent of Atcon's contracts are done outside New Brunswick.

Keir said the problem with Atcon paying some of its suppliers has been caused by the speed at which Atcon has grown by bidding on big jobs and the credit crunch.

The Opposition has raised the issue of limits on Atcon's executive salaries and bonuses after it gets financial aid from the government.

But Keir said the government won't get involved in the day-to-day operations of the company beyond its appointee on the new advisory board.

Keir said final details of the assistance will be worked out next week but he wanted to make it public before the legislature adjourned for the summer.

Official Opposition Leader David Alward said he hasn't seen all the details of the deal and he promised that the Opposition will continue to ask tough questions.

"This was a positive step today that we pushed the government to become public," he said. "The devil will be in the details."

Alward said he wants to know more about limits on executive pay and bonuses and how the new advisory board will work. He also said that any company that's owed money by Atcon must be reimbursed 100 per cent.

"We need to ensure if this does go forward that there are specific conditions in the contract," he said.

Atcon released a statement Wednesday confirming the agreement in principle.

"We are pleased the Province of New Brunswick has agreed to provide loan guarantees to our companies," said Robert Tozer, president and CEO of Atcon Group, in the statement.

"The global financial crisis severely restrained our access to capital and this investment is a vote of confidence in our companies and in the people of Miramichi and New Brunswick," he said.