NTCL says 'drastic' overhaul is 'long overdue' after near-decade of losing money

Northern Transportation Company Limited (NTCL) says a "drastic" overhaul of its operations is "long overdue" after nearly a decade of losing money.

NTCLprovides shipping services to communities and exploration projects throughout the N.W.T. and across the westernArctic.Many communities along the Mackenzie River rely onNTCLbarges for cargo dropsover the summer months.

On Wednesday the Edmonton-basedcompany receivedcourt protection in Alberta fromits creditorsas it looks to file a plan for how to restructure the company in the months to come.

"This was a very difficult decision and we looked at allavailableoptionsand ended upconcludingthat this was the best path forward for thecompany," said NathanGraham, the chiefcorporateofficer for theInuvialuitRegional Corporation, which wholly ownsNTCL.

While Graham said it's "possible"NTCLcouldreducethe number of resupply trips toindividualcommunities duringthe 2016 sailing season, he said"at this point we'renotsure" if layoffs will be necessary.

NTCL has regional terminals inInuvik,Tuktoyaktukand Norman Wells andoperational headquarters in Hay River, with employment peaking during the summer shipping season.

"Our employees are at the top of our mind for trying to make sure we treat everyone fairly," said Graham.

As for whether cargo rates could go up: "[Our priority]is not to try toraiserates to try tosqueezeevery last dollar out of it."

According to the company'swebsite,"the 2016 sailing schedule and rates will be posted soon." Typically, that occurs in mid-May.

Oil and gas slowdown, low water blamed

Graham saidNTCLhasn'tturned a profit for close to a decade, andthat the slowdown in Northern oil and gas work and low water levels in the Mackenzie River havehit the company particularly hard in the last year and a half.

"Climate change issues haveimpacted the company, including low water levels on the Mackenzie River, which has caused problems withnavigabilityover the lastseveralyears, which impacts our ability to do whatNTCLdoes," said Graham.

Asked if past management decisions also account for the position the company is in, Graham said,"Ratherthanlooking backwards in terms of decisions that havehistoricallybeenmadeand trying to undo them, we're trying to find a way to deal with the situation that the company is in today."

Graham said theInuvialuitRegional Corporationwhich bought outNunasiCorporation's share ofNTCLparent companyNorTerrain 2014 has invested millions of dollars intoNTCLin recent years.

"Unfortunatelywe're at a position in timewherethe combination of all the factors...as well as thesignificantfinancial impact... make itunsustainabletosupportthiscompany in its current form."

Communities react

The news aboutNTCLtook the mayor of Norman Wells by surprise.

"We'rea bit shocked," said Nathan Watson.

"NTCLis a critical part of our resupply,especially of heating fuel. We've got a couple of major projects planned for this summer that will hinge entirely on their ability to deliver the supplies that are needed for that."

Inuvik Mayor Jim McDonald was also shocked.

"Inuvikcan certainly survive through other means," he said, nodding to the overland supply route offered by theDempsterHighway.

But, he added,"I don't think the territory can survive without [NTCL]."

BradMapes, the mayor of Hay River, said that whilehe knew there were issues, the news was still unexpected.

"NTCL is a huge employer for our community," he said.

"We need to figure out a way we can make this feasible, to be profitable."

What's next

According to a newsrelease,NTCLwill continue to operate under protection from the Companies' Creditors Arrangement Act (CCAA).

Filing for protection under theCCAAallowsNTCLtimeto restructure its finances with the assistance of a court-appointed monitor. The Court of Queen's Bench of Alberta grantedNTCLprotection under theCCAAfor an initial period of 30 days.

Court-appointed monitorPricewaterhouseCoopersInc. will"overseeNTCL'songoing operations,liaisewith creditors and other stakeholders, and assist with development and filing of a formal plan of arrangement or compromise and attend to all court proceedings pursuant to the CCAA."

Sean Fleming, senior vice-president of consulting and deals forPricewaterhouseCoopers, says the next likely step in the legal process would seeNTCLapply for an extension to its initial 30-day protection period.