Government Responds to DSTN Decision
February 19, 2016 11:36 AM
The board of directors for DSME Trenton (DSTN) informed government late Feb. 18, that the company is ceasing operations permanently.
As the primary secured creditor, government will exercise its right to file for receivership proceedings to try to recover as much of its investment as possible.
"DSTN's future prospects have not improved over the past year, and the domestic wind tower market is well below expectations," said Business Minister Mark Furey. "Government has few options except to prevent the risk of further loss while ensuring all assets are returned to Nova Scotians.
"I know this is a difficult time for employees, their families and many people in the community who worked very hard to support this project. I share in your disappointment and offer my sincerest gratitude for your efforts," said Mr. Furey. "I also want to offer my thanks to our partners at DSME in Korea, and my regret that this joint venture was not successful."
DSTN has indicated it has several million dollars in cash, equipment and property. Taking action now will minimize the potential cost to taxpayers for any environmental cleanup or receivership fees.
According to the company, at this time they have no customer orders and are operating in a maintenance mode with 19 active employees. Continued operations in this condition are estimated to cost about $400,000 per month just to stay open. After more than five years in operation, DSTN did not make money on any contracts or achieve job targets.
"Government did everything reasonably possible to help the company become profitable, including supporting an investment attraction initiative that did not find any new customers or investors," said Mr. Furey. "Converting the facility to another use, such as manufacturing pressurized railcars, would have required another multi-million dollar investment from taxpayers. This is simply not affordable, and would have a limited chance of success."
In 2010, government committed up to $59.4 million to DSTN. This included $19.6 million for 49 per cent of the company's common shares, $36 million in repayable loans and a $3.8 million forgivable loan. $56.3 million has been disbursed to the company. The company informed government that it is not in a position to start payment on the repayable loans, which was scheduled to begin in early 2018.
FOR BROADCAST USE:
DSME Trenton informed government late February 18th that
the company is ceasing operations permanently.
As a result, government will exercise its right to file for
receivership proceedings to try to recover as much of its
investment as possible.
Business Minister Mark Furey says the company's prospects
have not improved over the past year, and government has few
options except to prevent risk of further loss.
DSME Trenton currently has several million dollars in cash,
equipment and property.
The company does not have any customers and it costs up to
four-hundred-thousand dollars a month to stay open.
Government invested fifty-six million dollars in the company
in 2010, and no repayments have been made.
Media Contact: Tracy Barron