ACOA could face losses on $400,000 loan made last year to company said to be in danger of failing

A federal agency may face losses on a $400,000 loan made last year to a Bedford, Nova Scotia, company whose co-owner said the business is unprofitable and should be dissolved.

The Atlantic Canada Opportunities Agency, which makes grants and no-interest loans to businesses, non-profits and local governments in the Maritimes, lent the money in March 2022 to Aquamedia Inc., a cleaning-products concern, as an "unconditionally repayable contribution." The money was to be used to "purchase equipment and complete renovations to support business growth," according to online government records.

AllNovaScotia reported in October that Ronald Anaka, who owns 50% of AquaMedia, asked a provincial judge to dissolve the business.

"AquaMedia is not a profitable company," the publication quoted Anaka as saying in court papers. "The cleaning product was never appropriately marketed and there are no current business orders to generate income."

Anaka is squabbling with co-owner Barry Munro, who AllNovaScotia reported today is challenging Anaka's proposal to liqudate AquaMedia. An attorney for Munro is quoted by AllNovaScotia as saying: "Dissolution and liquidation is not the most equitable solution."

Munro is the president of AquaMedia and Anaka the vice-president, according to Nova Scotia's corporate registry. The company's business name is AquaNaka Cleaners.

Data suggests that upwards of 20% of the dollar amount of ACOA loans are never recouped, and the figure may be higher. A 2007 study from the Fraser Institute found that 63.5% of ACOA loans were outstanding from the 10-year period ended in 2006. ACOA’s own research from 2014 showed that 22% of the dollar amount of interest-free loans made between 1995 and 2014 under the agency’s business-development program was defaulted on, written off or forgiven, while 53% was repaid and 25% remained outstanding. ACOA has said the chart is no longer made available to the public.

As a comparison, 3.3% of the Business Development Bank of Canada's loan portfolio consisted of bad loans in 2019 and default rates on bank loans were even lower, according to the National Post. The BDC is a crown corporation that makes loans to businesses.

In February of this year, AquaMedia received an $11,250 grant, also from ACOA, to "develop a strategic growth plan and provide business strategy mentoring." Last year, the company received a $20,000 grant under another federal program that assists "small- and medium-sized enterprises seeking to develop new export market opportunities and markets, especially in high-growth emerging markets."

--HBB

Rambler Metals, declared insolvent in April, owed $2.17 million to ACOA

The federal agency that underwrites economic development in eastern Canada is owed $2.17 million by the former owner of a Newfoundland mining project that has been sold in bankruptcy proceedings.

The Atlantic Canada Opportunities Agency (ACOA) has been repaid $828,463 of the $3 million that Rambler Metals & Mining had borrowed since 2016, according to data provided through an access-to-Information request made by HBB.

Rambler was declared insolvent in April, meaning it was no longer able to pay its debts. Just today, Rambler Metals and its Green Bay copper and gold project, located in Baie Verte, were sold to Auteco Minerals Ltd., an Australian mining company, for A$65 million (C$56 million) in cash and stock.

The unpaid loans stem from what are known as "unconditionally repayable contributions." ACOA provided Rambler Metals with $2 million in 2016 to "optimize and expand the grinding circuit for a copper concentrator" and another $1 million in the form of Covid assistance in 2021. In 2022, Rambler received a $100,000 grant for "digital improvements," which did not have to be repaid. ACOA loans are generally interest-free.

"This is a prime example of why corporate welfare is at best a risky business," said Franco Terrazzano, federal director of the Canadian Taxpayers Federation, a critic of government spending. "Does the government expect to get any more money back, or will taxpayers be left holding the bag?"

In the response to the access-to-information request, ACOA did not say whether it expected any additional recovery from the Rambler Metals bankruptcy. ACOA is listed as an unsecured creditor by Grant Thornton, the monitor overseeing the bankruptcy, meaning the agency has no claims on the company's collateral and that further recovery, if any, would come through litigation.

Under the bankruptcy proceedings, "all creditors, including ACOA, must respect the legal process of the court order," ACOA said in its response. "Distribution of any resulting proceeds of the amount due to creditors will be administered in accordance with the court order by the court appointed monitor."

Auteco, based in West Perth, Western Australia, is also developing an Ontario gold mine 400 kilometers north of Lake Superior.

--HBB

Nunavut, with no farms, gets $3 million from feds for agriculture

It will come as no surprise that Nunavut, Canada’s coldest region and among the world’s most inhospitable, has exactly zero farms. And yet, according to the Government of Canada, Nunavut appears to have a future in sustainable agriculture.

Earlier this year, the federal agriculture bureau handed out just over $3 million to the territory’s economic-development agency under a program known as the Sustainable Canadian Agricultural Partnership ("Sustainable CAP"), which aims to “to strengthen the competitiveness, innovation, and resiliency of the agriculture, agri‐food and agri‐based products sector.”

A spokesperson for Agriculture and Agri-Food Canada (AAFC) said the program's "framework supports initiatives and activities across the entire food system – not just for farms. This can include action to support food security and Indigenous food systems, and a full range of food production activities, including wild food harvesting."

Sustainable CAP, the spokesperson said, "seeks to advance...priorities that will increase the competitiveness, innovation and resilience of the agriculture sector, while taking into account the various regional needs from coast to coast." The money equates to about $90 for each of Nunavut's 33,330 residents, who are spread across an area about the size of Mexico. About 84% of the territory's people are Inuit.

The federal-provincial-territorial partnership recognizes that other provinces are better suited for agricultural endeavors. Ontario, whose 48,386 farms are the most of any province, received $341 million in funding from AAFC. Alberta, where 41,505 farms are located, received $304 million, and Saskatchewan, with 34,128 farms, got $291 million.

The other cold-weather territories also received funding. But they actually have farms. The Yukon, which received $5.6 million, has 88 farms, and the Northwest Territories, with eight farms, received $4.58 million.

Nunavut does have greenhouses financed in part by AAFC, and other indoor-growing facilities go back at least as far as 2013. Spinach, kale, peppers and tomatoes have been produced in this manner in Gjoa Haven, which lies above the Arctic Circle on King William Island about 1,000 kilometers north of pretty-cold Yellowknife.

According to Nunavut's travel website, the territory's warmest spot is Kugluktuk, where temperatures average -17C in April, the start of the Northern Hemisphere's growing season, and rise to 11C in July before falling to 3C in September and -7C in October, the tail end of the harvest in more temperate regions.

--HBB