28 June 2010

Dunderdale still awaiting proposal from bankrupt company; spokesperson promises “due diligence”

According to cbc.ca/nl, natural resources minister Kathy Dunderdale is still expecting a business plan from a German company to take over the Grand Falls-Windsor paper mill.

An unnamed spokesperson in Dunderdale’s office promised that the department will conduct “due diligence” on the proposal.

But as Bond Papers readers learned on Sunday, the company – Lott Feinpappen – has been in bankruptcy protection since June 15.

CBC added more detail on Monday:

As well, a lawyer with the Achern firm of Schultze & Braun told CBC News that Lott does not have the cash to pursue ventures, and cannot do business in Canada because of its legal situation.

The lawyer told CBC News that Lott is currently in "deep trouble." The German state is covering workers' wages at Lott — which produces high-quality paperboard products, and which has been in business for more than a century — until the end of August.

Insolvency procedures are to start in Germany in September.

In a news release late Monday, opposition leader Yvonne Jones said that this new information on Lott “highlights [the] careless and superficial work by government in not learning and disclosing this information to the public.”

Jones said that the provincial government “likes to talk due diligence, but rarely performs it.”

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NL population up by estimated 96 people

Don’t worry.

You read that correctly.

Statistics Canada estimates the population in Newfoundland and Labrador went from an estimated 510,805 to estimated 510,901.

96 people.

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26 June 2010

Potential GFW mill buyer in German bankruptcy protection for second time in six years

The same week German papermaker Lott sent deputy premier and natural resources minister Kathy Dunderdale a detailed letter proposing to take over the former AbitibiBowater mill in Grand Falls-Windsor,  the company went into bankruptcy protection in Germany.

According to the Insolvenz Rategeber:

Über das Vermögen der  Lott Feinpappen GmbH & Co. KG in Achern wurde Insolvenzantrag gestellt. Der Antrag erfolgte durch eine Gläubigerin des Unternehmens. Betroffen sind 70 Mitarbeiter, deren Löhne für die kommenden drei Monate über das Insolvenzgeld abgesichert sind.

The company – which employs 70 people – previously sought bankruptcy protection in 2004.

The premier’s hand-picked deputy told the House of Assembly on Thursday that she had received a business plan from the company the week previously:

Mr. Speaker, late last week we received a business plan from this company. It is currently undergoing assessment by us, the Department of Finance and the Department of Business. We do not have anything further to report at this time, Mr. Speaker, until that analysis is completed.

Outside the House, she told reporters that she was waiting to receive the business plan. What the company had sent was a detailed letter.

According to euwid-papier.de, Lott sought bankruptcy protection on June.

Dunderdale told reporters on Thursday that the provincial government would study the proposal very carefully.  Dunderdale raised hopes in central Newfoundland in late May by announcing in the legislature that representatives of a then-unnamed company had toured the mill and were interested in re-opening it. Apparently, even though she assured people of the province that her officials would review any proposal carefully, no one had, up to that time, done a preliminary review of the company and its financial history.

This is not the first time the Premier’s carefully chosen right hand has run into problems with business proposals.  As Bond Papers noted in 2005:

Then yesterday, we find out that no one [in Dunderdale’s department]bothered to check out American call-centre company Teletech using what Jack Harris has hilariously referred to as due diligence for dummies: the Internet search engine google.

Dunderdale is well known for blunders.  Some have been laughable.  Some are just plain ridiculous. Some are far more serious.  The deputy premier misled the legislature in 2006 over public tender act violations by a former Tory candidate filling a pork-barrel appointment.

In 2009, the deputy premier told the legislature a memorandum of understanding with Rhode Island for Lower Churchill had fallen through because the state lacked the necessary legislative jurisdiction to handle some aspects of the deal.  Turns out that NALCOR just couldn’t get the power to the state at a competitive price.

Dunderdale has also been known to score the odd own-goal of a far more  significant nature.  In September 2009, she revealed that she and Danny Williams had tried unsuccessfully for five years to interest Hydro-Quebec in an ownership stake in the Lower Churchill.  The deal would have been without redress for the disastrous 19569 Churchill falls contracts.  Before 2003 Williams insisted any deal he signed on the Lower Churchill would have to include redress. 

The secret talks to sell a stake in the Lower Churchill remains the biggest story of the Williams administration which has still not be reported by any mainstream media.

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Traffic drivers: June 21-25

  1. A Crown corporation by any other name
  2. China and CSIS:  the naive and sentimental writers
  3. Today in history (Meech Lake)
  4. The Spleen (Bill Rowe)
  5. Government of Newfoundland and Labrador Hiring Test (Communication Directors)
  6. Rowe book due this fall. Why?
  7. Public money in inflatable shelter company now hits $4 million in four years
  8. The Money Program
  9. Suns News?  Ya gotta be kidding.
  10. Government Talking Points:  the oil spill will never reach the shore edition

Bonus:  Spleen Audio! Here’s Bill in all his call-us interruptus glory.

This is what people in the blog business call a bizarre week.

Why bizarre?  Because an old post about Bill Rowe eclipsed the one posted fresh this week.

More on that way below, but other than that the traffic drivers were pretty straight forward.

Clearly people are interested enough in a company getting huge wads of public cash in a short time.  Three top posts this week relate to Dynamic Air Shelters.

Meech Lake grabbed a bit of attention even though the topic isn’t at all obvious in the headline.

China/CSIS and Sun News were popular national stories so that pretty much makes sense.  Undoubtedly more than a few people were surprised to learn the current administration in Newfoundland and Labrador had signed a pretty generous  memorandum of understanding in 2004 with a company they should have been more cautious about. Then again, this would be the first time they’ve blundered into something anyone with basic google skills could have warned them about.

The hiring test is clearly humourous.  Some people make have mistakenly thought from the headline it might be real.  Hopefully, they enjoyed the chuckle.

Posted late in the week, the oilspill quotes clearly hit a chord, just eclipsing a post about Dipper candidate in St. John’s South-Mount Pearl Ryan Cleary and the discrepancies in his story about why he left voice of the cabinet minister as its late night talk show host.

If the problem with VOCM was that Cleary wanted to spend more time with the family, being a member of parliament would be more incompatible with that goal than spending five nights a week yacking to the locals about whatever is on their sometimes less-than-sober minds.

Usually, it is a bad idea to draw attention to your own major shag-ups.  In this case it turned out to be a really, really idea for PAP as the smear attempt backfired big-time. Anyone who clicked through to BP clearly loved that Cleary post plus the old stuff about Billy Rowe. 

Double own-goal!

Just like the IRA bomb-maker in Belfast who liked to shift the nitrogen fertilizer around on his concrete garage floor using a metal shovel.

They never did find all of him, let alone the shovel or the garage or chunks of the backyard.

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25 June 2010

US courts accept AbitibiBowater backstop commitment agreement

AbitibiBowater issued the following on Friday: US$ ABWTQ (OTC)

MONTREAL, June 25 /CNW Telbec/ - AbitibiBowater Inc. today announced that, in connection with its creditor protection proceedings and exit financing efforts, the Company has obtained approval of a backstop commitment agreement by the U.S. Bankruptcy Court for the District of Delaware. On May 24, 2010, the Company had announced that it had secured a backstop commitment from certain unsecured note holders for a rights offering of up to $500 million. In this rights offering, AbitibiBowater would offer new convertible notes with a seven-year maturity from the date of closing to eligible unsecured creditors. Upon the effective date of the plan, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company. Additional information on this rights offering has been disclosed in the Company's court filings, which are available at www.abitibibowater.com/restructuring.

"We are pleased with today's court approval which supports our exit financing efforts. This is another important step forward as we look ahead to the Company's ultimate emergence from credit protection scheduled for early this Fall," stated David J. Paterson, President and Chief Executive Officer. "The Company expects to emerge with a significantly improved financial position, resulting from its efforts to reduce costs, lower debt and mitigate the impact of ongoing market and currency fluctuations."

Before emerging from creditor protection, the Company must obtain adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plans of reorganization. AbitibiBowater has commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans.

Ultimately, the Company's plans of reorganization will require creditor approval and confirmation by the courts. Affected unsecured creditors who are entitled to vote will receive the court-approved disclosure and voting materials, which are expected to be mailed in July subject to court approvals. More information about AbitibiBowater's restructuring process can be found at www.abitibibowater.com or by calling toll-free 888 266-9280. International callers should dial 503 597-7698.

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Government Talking Points: the oil will never reach shore edition #oilspill

Danny Williams, speaking in the House of Assembly in May 2010, as reported by CBC:

"As recently as this morning, we've looked at just exactly what the situations are in the North Atlantic," Williams said.

"It is a general understanding that because the offshore sites are significantly offshore and well east of the province that ... there's a lower likelihood that oil would actually come ashore in Newfoundland and Labrador."

From the Wall Street Journal, June 2010:

BP PLC and other big oil companies based their plans for responding to a big oil spill in the Gulf of Mexico on U.S. government projections that gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one.

Natural resources minister Kathy Dunderdale, in the House of Assembly, June 2010, as quoted by the Telegram:

  Mr. Speaker, based on 40 to 50 years of wind study, it is shown that oil, because of the wave action and the coldness of the sea, Mr. Speaker, breaks up and disperses. ... Mr. Speaker, we had an oil spill in 2004 on the Terra Nova. Mr. Speaker, that oil dispersed, broke up, and went away. Ocean floor studies have been done, Mr. Speaker, there is no evidence of oil from that oil spill on the floor around our Terra Nova project.

The WSJ, again:

The government models, which oil companies are required to use but have not been updated since 2004, assumed that most of the oil would rapidly evaporate or get broken up by waves or weather.

 

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China and CSIS: the naive and sentimental writers

Richard Fadden, head of the Canadian Security Intelligence Service said something a few days ago that did not go down well with many people.

In an interview taped on Monday past with Peter Mansbridge, Fadden said:

“We're in fact a bit worried in a couple of provinces that we have an indication that there's some political figures who have developed quite an attachment to foreign countries."

In the days since CBC broadcast the interview, Fadden issued a public apology in which he retracted his statement that CSIS was discussing with the Privy Council Office how best to deal with the provincial government’s involved.

Some commentators have made a big deal out of the fact Fadden made the comments this week, in advance of the G8/G20 meetings.  Others have taken the apology as a sign that Fadden has been reckless and that he may well be  - or ought to be - replaced very soon.

Two things:

1.  In the context of the week’s events, an apology and retraction would be absolutely necessary if only to save the Prime Minister’s face with foreign leaders.  But no one should take that official retraction for anything other than that.  Canada plays in the big leagues and Fadden is too experienced a public servant to make comments that are as off-the-wall as the apology might suggest. 

Fadden’s comments may alarm the uninformed  - and there are evidently plenty of those out there - but for anyone even passingly familiar with CSIS publicly available intelligence assessments there is no surprise in anything Fadden said. China has long been mounting a campaign of economic and political espionage around the globe.  The country’s aggressive moves into the energy sector is well known.  The two things together suggest a need for wariness, if not increased vigilance.

Incidentally, you can include in the ill-informed list none other than Brian Mulroney’s former chief of staff, Norman Spector. The facts are at cbc.ca.

2.  Around these parts, no one should be surprised either at the Chinese presence  or the potential naiveté of some provincial administrations. 

In 2004, the Williams administration signed a memorandum of understanding for the potential development of the Lower Churchill. 

The company – Sino-Energy – was a consortium of companies that included a state-owned Chinese corporation that has been involved in questionable arms shipments.  The memorandum of understanding gave Sino-Energy complete access to NALCOR information, including details of the interconnection between Churchill Falls and the rest of the North American energy grid.

Bond Papers discussed the MOU issue - including the national security implications – in a 2005 post. No one has followed up on the story since Jeff Ducharme started it. 

The Williams administration might not be on CSIS’ watch list  - they might; China might not be the only foreign country of concern either - but that doesn’t mean they been known to make some amateurish shag-ups when it comes to signing secret deals like that memorandum of understanding with questionable foreign companies.

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24 June 2010

Public money in inflatable shelter company now hits $4 million in four years

With a dose of $249,978 research money from the provincial government’s research and development corporation, Dynamic Air Shelters has now received about $4.0 million in public cash since 2006.

The federal government dropped $300,000 on the company on Monday.

That was on top of nearly $3.5 million the company had received between 2006 and earlier this week.  Most the cash has come within the past 18 months.

Here’s how the official news release described the most recent cash infusion:

Dynamic Air Shelters Limited is a world leader in inflatable blast shelters. Dynamic has the lead in this market and must maintain it by demonstrating constant improvement and validating the improvement through rigorous and controlled testing. The goal of this R&D project is to prove the performance of a production-model prototype of a fully upgraded blast shelter system that includes components and assemblies not yet tested. Expanding the blast resistant market and repelling competition is the most critically important feature of this product development. The RDC’s investment is $249,978 of a total project cost in excess of $1 million.

Dynamic Air Shelters received the largest single batch of funding in the most recent announcement.

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23 June 2010

Rowe book due this fall. Why?

Danny Williams’ former personal envoy to Hy’s tossed out a few bon mots to those listening to the province’s Open Line show on a sunny Wednesday.

Someone else picked up on the rest of the chat but your humble e-scribbler chuckled at this bit:

There were a number of excerpts from the work in progress  that are now being compiled into a full length book.

Rowe thought he had something from his short stint in Ottawa that was worth putting to paper. It was a short time (six months), if memory serves, but Rowe apparently had great insights to offer.

So great were the insights that he quit his stint as a columnist at the Telegram to write the book.   Rowe claimed that writing a column every week for the largest circulation daily in the province would hinder his writing ability. Your humble e-scribbler had a great larf at that idea back when Rowe forecast his magnum opus was in the works.

So weighty were the burdens of a weekly column that Rowe took to writing a weekly column for the Spindy which would become the book. And of course, collectors of great local literature will recall Billy once edited a collection of his old Telegram columns together into a book as well.  Column-writing does indeed interfere with book-writing.

Don’t worry, folks.  This makes no more sense now that it did when Bill first penned his good-bye in the Telly.

And, as you may have noticed, those Indy columns were the works in progress now being compiled into a full-length book, not unlike the 1980s vintage compilation which also wound up in a full-length book. 

Just go with this for a second.

A full-length book would be in contrast to a half-length book or a three-quarter length one. 

Just take a book off the nearest bookshelf and see how many pages it is.  Now randomly pick another one – any book, any shelf – and preferably not from the same series or encyclopaedia.  Note that the number of pages is different from one to the other.  Pick another.  Same thing?

That’s because “book” is not a standard unit of measure.  There can be no full-length book since, by definition, every book is “book” length.

Yes, folks, Bill is a fountain of these sorts of idiotic remarks.

But anyway…

By now, those of you who haven’t clicked off to the old post from Bill’s last column at the Telly might be wondering how long this book  - covering a mere six months of time, don’t forget – has taken to cobble together.

Rowe started the Ottawa gig in 2004 and quit in the winter of 2005. Bill’s last column for the Telegram was in October 2007.  Presumably he was writing it then or had pulled together some bits and pieces to start work.

If this book appears in the fall of 2010, then we are talking six years from the time he started the gig, five and a half years or so from the time he quit the job and three years from the time he quit the Telly.

Even if we allow Billy boy finished bashing out the manuscript in late 2009, we are still talking two full years to document his recollections of events that took no more than six months to experience in real time.

And that’s allowing that he had three or four of the episodes published in the old Spindy.

So what’s so special about this fall for a book covering events that are already rapidly receding into the mists of time?

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Government of Newfoundland and Labrador Hiring Test (Communications Director)

The provincial government is looking for a few new communications directors.

Standards are high.  Not everyone can do the job.

The public service commission is under such pressure to find enough people to meet the stringent criteria set down by the Premier’s Office that they’ve had to simplify the qualifying exam.

Gone is the intensive two stage examine, including a written test, before the list was passed to the Eighth for selection.

According to the latest internal e-mail circulated last week – and obtained by your humble e-scribbler – public service commission examiners are to place two objects in front of the candidate.  They are not allowed to say anything. They must merely observe what the candidate does.

See if you can figure out how to pass the test.

Object 1:

Ball-Centre-Door-Knob

Object 2:

polishing cloth

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The Fragile Economy confirmed

BMO Capital Markets lays out the scope of the problem:

Newfoundland & Labrador [sic] saw a sharp 10.2% real GDP contraction in 2009, the worst performance in Canada. However, improvement in the mining sector and a reversal of some temporary factors will drive 4% growth in 2010 and solid 2.8% growth in 2011.

Problem? sez you, wiping the purple freshie from your lips. 

Growth returns. 

Here’s the problem:

However, the biggest economic driver in the province in the next two years will be construction activity. Government infrastructure spending will total about $1 bln in FY2010/11, helping boost total
capital spending an expected 23% in 2010. Provincial government infrastructure spending will amount to more than $5 bln over the next several years, keeping the economic fuel burning into 2011. At more than 3% of GDP, the Province’s infrastructure program is among
the largest in Canada relative to the size of the economy.

It is definitely not good when the public sector is driving the economy to such a degree.

And as for all the rosiness in BMO’s outlook. 

Well, let’s just say they obviously haven’t done any detailed analysis of the local economy especially if they think the recent population growth is driven by anything other than migrant labourers returning home from other parts of the country.

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The language of Shakespeare

On the one hand, you have the regular performances of Julius Caesar at Cupids, site of the of early 17th century English colony.

There is a tide in the affairs of men
Which taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.

And on the other hand, you would scarcely recognise the language of Shakespeare some four centuries on, as it is spoken in the House of Assembly:

Staff members at the school say that the faces of the children light up as they eagerly access the food items each morning.

Yes, that’s what we all long to do with food:  access it.

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22 June 2010

Brazil to expand oil production

From UPI:

RIO DE JANEIRO, June 22 (UPI) -- Brazil will spend $224 billion in five years on doubling its capacity for oil production and export despite cautious business optimism on the future global outlook for crude prices.

State-run Petrobras oil giant unveiled the spending plans as Chief Executive Officer Sergio Gabrielli set out the company's strategy to build capacity in the run-up to 2020, when Brazil will have doubled its production to 5.4 million barrels a day from 2.7 million barrels a day at present.

[more]

Anti-Rubinesque Update:  Peak oil, Schmeak Oil:

But crude oil itself has already peaked – at least five times since 1950, Prof. Boyce says – without beginning to approach the demise of oil anticipated by peak oil theory’s famous Bell curve. Indeed, crude oil reserves have doubled roughly every 15 years since 1850 and the world now has more proven reserves than it has ever had in the ensuing 150 years.

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A Crown corporation by any other name

A company that has received almost $3.5 million in federal and provincial government money since 2006 is getting another $300,000 from the federal government to support its production.

Dynamic Air Shelters will receive another $300,000 for “research, and development, engineering and marketing initiatives.”

That’s in addition to the $575,000 the company has received over the past two years for research from the federal government.

Since 2008, the company has received more that $2.0 million in federal and provincial government money to support its business operations.

A Crown corporation by any other name would not  be sucking so much public money.

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Today in history

June 22, 1990.

The Meech Lake Accord died.

In Manitoba, Elijah Harper refused to give the consent needed to bring the Accord to the floor of the legislature for debate.

In Newfoundland and Labrador, and after a last-minute effort at further manipulation by the Mulroney administration in Ottawa, Clyde Wells spoke at length in the House of Assembly before adjourning debate on the Accord.

Some predicted the country would fall apart.

It didn’t.

The finger pointing continues to this day, as Deborah Coyne concluded her memoir of the affair: Roll of the diceBrian Mulroney’s 2007 memoir is full of vitriol and a unhealthy dose of misrepresentation about the Accord debate.

Jean-Francois Lisee used exactly the same sort of fabrications as Mulroney to begin his blog series on the 20th anniversary of the Accord’s demise. Then again, the premise of the Accord was a fabrication, a falsehood, a blatant lie so it’s really not all that surprisingly that some of its proponents still rely on falsehood to argue for their case.

Meanwhile, in another corner of the universe, Gil Remillard, Quebec’s intergovernmental affairs minister at the time thinks:

<<L'entente du lac Meech aura servi à préparer le terrain et 20 ans après, on se rend compte que maintenant, nous faisons beaucoup de choses comme on voulait que ça soit fait lorsqu'on a discuté de Meech.>>

For the most part, though, only a few people in the country have even noticed the anniversary slip by.

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19 June 2010

Gulf #oilspill economic impact not what it seems

Crude is currently trading eight percent below where it was the day the BP rig in the Gulf of Mexico blew up.

CBC quotes a TD economist as saying that:

“It probably won't have a huge impact [on global oil production]. Deepwater drilling accounts for about seven per cent of global output right now.”

But the same online piece notes that Gulf of Mexico production accounts for 30% of American domestic output.

Now if there should happen to be a complete moratorium on new drilling and exploration in deep water as a result of the BP disaster, that could have interesting repercussions.  All those rigs currently being used in the southern US will be available for renewed exploration efforts in other parts of the world.  Like say offshore Brazil or offshore Newfoundland.

And hey, notice that the CBC article refers to tougher regulation.  That doesn’t mean something like a ban;  it just means Americans will start applying the same sorts of regulation that other countries take for granted and where exploration and production is going on as always.

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Weekly Traffic Drivers, June 14-18

  1. Sun News?  Ya gotta be kidding
  2. Telling quotes:  Lower Churchill version 
  3. Eventually the other guys will lose (Newfoundland and Labrador political culture)
  4. Roger Fitzgerald’s bias (The Speaker of the House of Assembly is biased)
  5. NB Connies argue over pork
  6. We thought *you* had jobs for *us* – Russian version
  7. Opportunity for comment – Hebron project
  8. The Le Petomane School of Government (House of Assembly legislative agenda)
  9. One for Chuck (Takogo kak Putin)
  10. The World of the Psychic Economic Forecaster (crude oil price forecasts)

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18 June 2010

Weather is here…Russian junket version

1. What a total waste of time!  What politician,  any time in the history of human civilization ever went on a lovely trip to a foreign land entirely at taxpayers’ expense and came back proclaiming that the junket was anything but “productive”?

2.  The St. Petersburg economic forum was about attracting investment to Russia.  Is the Lower Churchill underwater line now going to run to Murmansk, he asked facetiously?

3. Dear Ladies and Gentlemen of Facebook… As for anyone being invited, the SPIEF organizers extended the exclusive invitation to everyone on Facebook.  Find any mention of Canada – let alone Newfoundland and Labrador – on the official Twitter feed for SPIEF.

SPIEf invite

4.  The event ends tomorrow.  Wasn’t the release announcing the glorious events of the trip a wee bit premature?  Don’t anybody mention quotas of happy news.

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International Can Opening: Gold hits new record

Gold is up again  - a record US$1,248 an ounce - based on economic problems in Europe and the United States.

Oh yeah.

Bring on the recovery baby.

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The World of the Psychic Economic Forecaster

On the one hand Jeff Rubin is in St. John’s telling audience that oil will be back in triple digit pricing within six months and will stay there. It’s a line from his book, basically.

The recovery presumably is underway and is solid.

On the other hand, in another part of the globe someone notices that a key index of shipping tonnage is currently at about 2,784 compared to 11,793 points  - a record high – that it hit just before oil prices hung in the triple digits for a short period in 2008.

Followed of course by a massive collapse.

Jeff says oil prices caused the collapse.

Okay.

Sure.

And that runny nose you have?

It caused your cold.

Chest pains?

Caused your heart attack.

Jeff’s forecast and the indicators don’t quite seem to fit together, do they?

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