Monday, December 26, 2016

NTCL - 11th hour deal

A last minute deal, filed only two days before NTCL (Northern Transportation Co Ltd) would be declared bankrupt, has apparently given some reassurance that northern Canadian communities may be supplied by water transportation again in 2017.

The company was forced into creditor protection after years of losses.  After the court appointed monitor sold off non-core assets (four tugs and a dozen barges) it began to search for potential buyers to run the company as a going concern. The "Sale and Investment Solicitation Process (SISP) resulted in only one potential buyer, but that deal did not go through when the bidder backed out.

An unsolicited offer then appeared from 2006647 Alberta Ltd (a mystery buyer! never identified) which the court appointed monitor was ready to recommend to the court at a December 15, 2016 hearing. The offer was conditional on financing, for 12 tugs, 73 barges and some miscellaneous equipment and real estate, but was apparently bona fide and would at least return something to the creditors (including the seriously underfunded employee pension plan). The company's remaining assets would then have be auctioned off, likely for scrap value.

Then on December 13 another unsolicited offer arrived, from none other than the Government of the Northwest Territories as represented by the Minister of Public Works and Services.  Much to the consternation of the monitor, the new bidder was aware of the amount of the other bid, which was in fact no secret, since it had been released to some contestants for creditor status.

Nevertheless the government bid was higher, was unconditional and also offered to acquire some additional assets to those bid on by 2006647. Therefore the monitor recommended it to the court (with reservations) and it appears to have been accepted without conditions, except the usual formalities.

So now it appears that the NWT government is in the tug and barge business, having acquired 12 tugs, 73 barges and a long list of miscellaneous items including a dry storage area for the miserable amount of $4.5 mn. (NTCL had debts of $130 mn on April 27, 2016, and a book value of nearly $45 mn.).

How many of those tugs and barges the NWT will be able to put in service for 2017 and how it will be able to manage the 2017 supply operation will be watched very closely by many.

Perhaps the government will hire back those laid off employees and begin to make up the $22mn pension shortfall left by the previous owners. It likely won't be doing it out of profits, however. The operation needs an investment infusion for new equipment - especially double hulled fuel barges, and some tugs.

The recent federal government five year "moratorium" on northern oil drilling will be another blow to potential profits, but it seems to me that this form of northern transportation is so essential to western arctic life that it has to be operated as a public service.


The roots of the Northern Transportation Co Ltd go well back in time. However the essential nature of the work has not changed. Somehow navigate barge loads of supplies through extremely shallow waterways during a short operational season.

In 1937 the noted naval architects Milne, Gilmore and German designed a pair of tugs for just such work. They were built by Marine Industries Ltd (known then as Manseau Shipyards Ltd) in Sorel, QC, disassembled, transported by rail, water and overland and reassembled in the north, by workers from Sorel. They were of all welded construction (still a novelty in 1937).
The following scans may not be entirely legible, so the captions summarize the details:

Radium King 115 grt, 2 x 240 bhp Gleniffer, twin screws in tunnels
95'-6" loa x 20'-6" x 6'-3" depth, 4'-3" maximum draft, accommodation for 11 crew and 6 passengers
for service on Slave River, Great Slave Lake and Mackenzie River.
This pioneering craft was retired in 1967, but has been preserved at Forth Smith, NWT.

Radium Queen 108 grt, 2 x 160 bhp Gleniffer, twin screws in tunnels
86'-3" loa x 20' x 5'-0" depth, 1'-9" maximum draft, accommodation for 11 crew and 6 passengers
for service on the Athabasca and Slave Rivers between Fort McMurray and Fort Fitzgerald.

The first of the two to be shipped to Waterways, AB - then end of rail - Radium Queen was assembled then towed the partly assembled Radium King to Fort Smith. Radium King was then hauled 16 miles overland in pieces by tractors, and finally assembled in Fort Fitzgerald.

Both tugs were later repowered:  Radium King with two 10 cyl Vivians in 1945 for 550 bhp and Radium Queen with two 4 cylinder GMs in 1948 for 500 bhp.

Their flying bridges were also enclosed with wheelhouses of essntially the same size as the lower one.

As to the NTCL assets previously sold by the monitor, there has only been one change of name so far.
The barge NT 1511 has been renamed Qamani'Tuaq by Transport Desgagn├ęs Inc. They had been chartering the barge in the eastern arctic since 2013.


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