08 February 2008

Fed agency suing SAC for loan

Transcontinental's Rob Antle reported today that the federal Business Development Bank of Canada (BDC) is suing SAC Manufacturing over a $150,000 loan the defunct natural gas company received from BDC in February 2006.

The provincial government is also reportedly moving to secure $675,000 it invested in the failed venture. The province loaned the company $175,000 in early 2006 and a further $500,000 in December 2006. The directors of the company moved to Alberta four or five months later and notified the province in September 2007 the company lacked funding to continue operations. BDC alleges SAC defaulted on over $134,000 remaining on its loan in November 2007.

As Antle reported:
The province says it has moved to take action to recover its $675,000. Officials said they have security for the province’s investment, in the form of assets, personal guarantees and an equity stake.
The company directors had personal guarantees for the BDC loan as well. There are no assets of the company left in Newfoundland and Labrador, at least in terms of real property, and the equity stake - in the form of Class B shares - is really only worth anything if there are company assets to cover them.