Die has been cast for troubled Northside plant
November 23, 2009
CHRIS HAYES
The Cape Breton Post
NORTH SYDNEY — The final chapter is being written for a die-cast manufacturing plant in Cape Breton. The story started with a good news announcement in 2004. A company called Cape Breton Castings Inc. was being established in the Northside Industrial Park to manufacture die-cast parts for the auto industry.
Cape Breton Castings received $24.7 million in government assistance before its assets were sold in 2007 for a $2-million promissory note to a group of mostly Cape Breton business people in a company called Atlantic Castings. Now, Atlantic Castings Ltd. is in receiverships and its assets are advertised for sale on a website.Greg MacKenzie of the Sydney company MGM, which is handling the receivership, said he has arranged for the assets to be sold by a company called Die Cast Machinery, LLC, of Waukegan, Illinois., which specializes in this kind of sale.
MacKenzie said as of Monday, about one-third of the assets had been sold to Canadian and U.S. die-casting companies for about $500,000 to $600,000, and it appears a deal is pending to sell one-third to a company based in India.“Nothing leaves the plant until the money is in our account, but it has been spoken for and we understand we will be getting the money for that second third probably within a couple of weeks.“The final third we are still in negotiations and talking to people.”
MacKenzie said he can’t disclose what dollars figures are being discussed with the potential buyers.Atlantic Castings went into receivership on July 10 with three creditors each of whom were secured for about $2 million, he said. Secured creditors include the Nova Scotia Department of Economic and Rural Development, which is first in line to receive money from the sale of the assets, a company formed by the former owners called Atlantic Castings Holdings Ltd., and Cape Breton Castings Inc. a company owned by ECBC/ACOA, said MacKenzie.
MacKenzie noted that the Atlantic Castings machinery is on the market at a time when the die-cast industry and the automotive industry it supplies are in a downturn. He wasn’t optimistic about the likelihood all three of the secured creditors will receive any money from the sale of the assets.“If the province gets all of their money they’d be pretty lucky, I think.”
The announcement in 2004 that Cape Breton Castings would be established in the Northside Industrial Park making die-cast parts for an auto parts plant next door was hailed as a good news story for the area’s economy. Over the years, the project received $24.7 million of repayable assistance from the Cape Breton Growth Fund, which was set up to create development to cushion the blow of the loss of the Cape Breton coal industry, and from ACOA and ECBC. The growth fund took control of the plant in March 2006 when the project proponents encountered difficulty and surrendered their shares. The assets were sold to a group of mostly Cape Breton business people in November 2007 for $2 million, payable by way of a promissory note. The owners were to also immediately inject $2 million of working capital into the operation, ECBC noted at the time of the sale, followed by an investment in new equipment.The directors of Atlantic Castings include Irving Schwartz, Harold Schwartz, Jim Kehoe, Sean Burke, John Eyking, Theodore Eyking, Jean Dugas and Allan MacPhee, of Dartmouth.
Heather Deighan, a spokesperson for Economic and Rural Development, said Monday the department has not received any repayment yet on its investment in Atlantic Castings but it expects to receive money from the sale of the assets.
D.A. Landry, an ECBC spokesman, said the agency has not received any of the $2 million in the promissory note.
chayes@cbpost.com
24/11/09
COMMENTS
Publius Clodius from NS writes: Pump and dump? You decide.
Posted 24/11/2009 at 1:17 AM
paul m from cb writes: We ,the taxpayers, paid over $29 million to start this thing. Then a group from Sydney buys it for $2 million, but never pays the $2 million. What kind of a deal is that ??? So, how much more that this $29 million has been wasted like this on Cape Breton, and don't forget to throw in the old lobster pound that used to be at Auld's Cove that the taxpayers bought and then it gets torn down a year later; or that mushroom place on the 105 , or that museum in Cheticamp that cost over $1.2 million that sits vacant, while we build a second one within 10 km . Gov't is good at sending out press releases when they lend money, but never send any out to say when they are owed money and have taken legal action , which by the way is often involving going to court . Oh, maybe they don't treat these big businesses as tough as they'd the little guy.
Posted 24/11/2009 at 4:02 AM
mummer me from sydney mines, ns writes: good old cape breton,the island where you can come in a pauper and leave a millionaire and not invest a penny of your own money,theres' definately something wrong with this picture
Posted 24/11/2009 at 7:26 AM
PDG from ns writes: Very surprised the Post even published this story. We usually have to check the Herald for details of this sort. Now maybe CBC will dig deep and land an interview with one of the Eyking clan. Perhaps Steve Sutherland will use his hard-nosed journalistic skills on the MP himself. Not gonna happen. Two peas in a pod.
Posted 24/11/2009 at 9:49 AM
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