Final ferry deal in detail

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By Belle Hatfield
The VANGUARD
www.thevanguard.ca
 
The final deal signed by Singapore Technologies Marine Ltd (STM) and Quest Navigation Inc. with the province of Nova Scotia to establish a ferry service between Yarmouth and Portland, Maine is almost identical to the letter of offer released in Yarmouth by Graham Steele, former minister of economic development, on Sept. 5.

(See story here) The major changes involve the timing of when STM-Quest will be required to kick in its financial contribution and some of the language around salary deferrals for the company’s senior executives.

The province announced on Tuesday, Nov. 12 that it had signed off on the letter of offer outlining the operating agreement between the joint venture company, STM-Quest, that has formed to operate the service. Last week the final letter of offer was made available to the media. Click here to go to final letter of offer.

One of the amendments made to the letter was to clarify how and when ST Marine would provide its $3 million contribution to cover any operating losses. It would be made after the province’s $21 million loan has been exhausted. Under the agreement the province would provide $10.5 million for start up costs and then $1.5 million in each of the following seven years for a total of $21 million.

Both agreements require STM-Quest to "inject at least $3 million to cover operating losses", but in the final letter it is spelled out that the company’s injection of capital occurs only after “the province has advanced the full amount of the Forgivable Loan to [STM-Quest]." Further the province acknowledges that the $21 million may be used earlier than the seven-year timeframe of the agreement. And further, at that time, when STM-Quest must make its monetary contribution towards operating losses, the province will consider a cut in the leasing costs as equivalent to a cash contribution from the company.

There are terms and conditions that the company needs to meet to get the province’s financial assistance and earn forgiveness. Although the letter indicates that the province’s loan payments may be accelerated, any changes to that schedule would need to be approved by the province.

There is also language in the offer regarding salary and bonuses collected by senior officials of STM-Quest.

Changes were made to the original letter of offer, from Sept. 5, that add more detail to the section on the terms of the senior management salary deferral during the start-up phase and if there are operating losses. References to executive compensation have been taken out of the main letter of offer and are included in an appendix. 

Among the conditions, it stipulates that the four senior executives will receive 50 per cent of their salary, as identified in their proposal. The remaining 50 per cent is payable after the fact for any year in which the company operates without a loss and when payment of the deferred salary doesn’t place the company in a loss position.

There are many dates by which performance measures have to be met sprinkled throughout the letter of offer. Although they are contained in the original letter of offer, they have been redacted from the online versions. A spokesperson from the Department of Economic and Rural and Tourism Development said they are deemed to be commercially sensitive information and are subject to the Protection of Privacy Act.

 

Organizations: STM-Quest, Singapore Technologies Marine, Quest Navigation ST Marine Department of Economic and Rural

Geographic location: Yarmouth, Nova Scotia, Portland, Maine

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