Ridley Terminals could be back on the market, according to president and chief operating officer George Dorsey who was speaking at a Platts Coal Properties and Investment Conference in Fort Lauderdale, Florida on March 16
“The government understands the facility is, politically, becoming difficult,” Dorsey said, alluding in part to a contract the crown corporation signed with US company Arch Coal.
“There’s a variety of interests in Canada. But the value of the terminal has gone up rather substantially, so there’s a shrinking number of potential buyers.”
Dorsey said the terminal has $120 million of cash in the bank, and during a speech at the Vancouver Board of Trade on March 15 board chair Bud Smith outlined just how much the value of the terminal had changed since previous attempts to sell it.
“Today Ridley’s enterprise value is not the $5 million it was to be sold for in 2005, but rather a projected $750 million at the 2012 year-end, and approaching $1.5 billion when our current expansion completes by 2015. At year-end 2012 that plus $200 million accumulated deficit [at the end of 2006] will be gone, to be replaced by retained earnings…Our projected Net Profit for the year ending December 2011, under new accounting rules, will be above $100,” he said.
“By any measure, that is an extraordinary financial success story for taxpayers…Ridley has achieved that turnaround by requiring its users to pay full market price for service; provide minimum guaranteed throughput; and by preferring long term contracts to spot arrangements.”
Talk of the sale also comes following an “asset review” conducted by the Government of Canada over a year ago that looks at whether or not crown corporations still perform a useful function, are still relevant to their original purpose and that they are wise use of taxpayer dollars.
“Our government performs regular rigorous reviews on government assets to ensure spending is as efficient and effective as possible…This is responsible, prudent and routine action,” said Ministry of Transport press secretary Genevieve Sicard.
Smith said any talks of a sale before a government announcement or policy are premature.
“The Federal Government has said repeatedly they’re actively looking at all kinds of options for their hard assets such as land and operations, and no doubt that opens all kinds of opportunity to speculate,” said Smith, adding that there is no change to the status quo at the moment.
MP Nathan Cullen also said it seemed speculative, but said making any movement on the matter at the moment wouldn’t make sense.
“After putting so many millions into Ridley Terminals, why would you want to sell it when it is finally making money after so many years of not…We’ve seen a few iterations of wanting to sell Ridley. My worry is that it fits into the ideology of the current government to privatize everything and sell off crown corporations. I don’t want Ridley Terminals to fall victim to that,” he said, adding that bringing forward the idea should take the form of more than an announcement or budget item.
“It should go to Parliament for an honest debate. People need to have an opportunity to have their voice heard, especially here in the northwest where it would have such an impact.”
As for the current expansion Smith told the Board of Trade that the doubling of capacity could be just a start.
“We have begun initial planning to acquire more land from the Prince Rupert Port Authority, option a water lot for a second jetty, so that we can grow Ridley’s capacity to 60 million metric tonnes, which will make Ridley one of the largest facilities of its kind on the entire Pacific Ocean,” he said, noting that the cost of the expansion is coming from the company’s cash flow.
“The often tritely used phrase ‘world class’ will be truly applicable to both Prince Rupert and Ridley Terminals when that next phase is completed.”
~with files from www.platts.com
