Fast & Curious: Short Takes on Random Things

SHIP Show Update

Did you catch the latest episode in the SHIP Show? How many times can one program jump the shark?

The CBC reported on Wednesday that Membertou Corporate has ” made an investment that gives it a 22.5 per cent stake in Sydney Harbour Investment Partners (SHIP),” a company operated by Albert Barbusci and Barry Sheehy. Chief Terry Paul told the broadcaster he hoped the move would help the provincial government “make up its mind on the railway.”

Meaning, Paul hopes the move will encourage the province to continue subsidizing Genesee & Wyoming — or, as of December 30, Toronto-based buyout specialist Brookfield Infrastructure Partners, which has purchased G&W  — so it will not abandon the Cape Breton portion of its CBNS short line and sell it for scrap.

Barbusci, who hasn’t been heard from since October, when he turned up with  a plan to build a plastics-to-fuel plant on Sydney harbor, popped into the story to say:

The port cannot function without rail. Period.

Which is the exact opposite of what he was saying around this time last year when the Cape Breton Post reported:

Efforts to bring a container port and logistics park to the Sydney area are not entirely dependent on a Cape Breton railway, says the head of the firm with the exclusive marketing rights to Sydney harbour.

However, Albert Barbusci, CEO of Sydney Harbour Investment Partners (SHIP), said bringing the now disused rail line up to operating standards would greatly benefit any project.

In a telephone interview with the Cape Breton Post, the Montréal-based businessman clarified his firm’s two Sydney port strategies.

“One is trans-shipment, where we will use short sea shipment down the coast, but it won’t be as ideal for us as port developers and operators because the rail complements the other side, so the ideal option would be a combination of moving cargo by rail and short sea shipping,” said Barbusci.

“But, if we had to go trans-shipment as a standalone we could do it, it’s the model with which we launched ourselves originally — we can do either or, but the ideal scenario would be to get the upgrade on the rail, to run cargo down south and trans-ship as much as we can.”

The latest CBC story continued:

Barbusci wouldn’t say the partnership announcement was intentionally timed to influence the province’s decision.

Which is funny because Chief Paul had no qualms about saying the partnership announcement was intentionally timed to influence the province’s decision. The story continues:

“I think what we’re saying is, ‘Look, we’re doing everything we can do privately and we now have strong Indigenous partners with us and it’s time to move forward in 2020,'” said Barbusci.

This is a real eye-crosser, given that when CBRM Mayor Cecil Clarke decided to clear his desk in late 2017 to run for the provincial Tory leadership, he announced his work on the “port file” was done and that the project would henceforth be in the hands of the private sector developer, SHIP. In fact, he told us we could expect a big announcement from them early in the New Year. No such announcement was forthcoming, but the project remained in SHIP’s hands, according to erstwhile CBRM economic development manager John Phelan, who told me in early December 2018:

Any updates about the container terminal would need to be provided by the Port developer, as it is in their hands.

So, the municipality did all it could to facilitate the project then handed it off to the private sector developer and now, two years later, the private sector developer is announcing it has done all it can and needs a public sector partner again — this time in the form of Membertou First Nation?

It’s like it’s a relay race and Chief Paul has just been handed the baton.

 

Expertise

And no offense to Chief Paul, but has he ever developed a container terminal? Does heading a corporation that runs a gaming commission, a restaurant, a bowling alley and a 12-acre section of Sydport qualify him to pronounce on the “potential” of Sydney harbor as a trans-shipment hub for ultra-large container vessels? I’d say no, although I’d also say his lack of relevant expertise makes him a good fit for SHIP, a port development company founded by two men who have never developed a port.

On Thursday afternoon, the St. John’s Telegram published a story based on a press release that stated SHIP had “expanded it partnership consortium to include Membertou First Nation and Bridging Finance Inc.”

Bloomberg describes Bridging Finance as “a Canadian lender to indigenous people.” Bridging Finance describes itself as:

…a privately held Canadian company providing middle-market Canadian companies with alternative financing options to those offered by traditional lenders. The funds deployed by Bridging are used to address short-term needs…

It seems there is no real consensus as to what constitutes a mid-market company, but the definitions I’ve read all focus on number of employees and volume of revenues and since SHIP has neither revenues nor employees, I’m curious as to how it qualifies for Bridging’s “alternative financing options.” Also, wasn’t AVAIO Capital supposed to have signed on to finance this project? Didn’t Barbusci tell the Post that in May?

“Aecom engineering designed our first phase, the 460-metre wall and Aecom Capital, which is now Avaio, will be our financial partners,” Barbusci said during a break at the Port Days conference in Sydney on Thursday.

How is a person to keep up?

 

Consortium

This “partnership consortium” is a slippery concept. Barbusci has named a lot of companies as “partners” that later turned out to be paid contractors (like Bechtel and AECOM).

The Telegram states:

Membertou has an existing partnership through SHIP’s Novazone project, a planned logistics park of more than 1,250 acres next to the Novaporte site. All 13 Nova Scotia Mi’kmaq communities are also major shareholders of Novazone. Future plans are for Membertou to become a major equity player in SHIP and Novaporte — while remaining invested in Novazone.

I don’t understand how this works.

The best I could figure, based on SHIP Inc’s listing in the Quebec business registry, is that SHIP Inc’s shareholders are Albert Barbusci and Canderel Martime Ventures Inc:

Source: Registraire des entreprises Quebec.

Source: Registraire des entreprises Quebec.

SHIP Inc established a special purpose vehicle for the container terminal project, Sydney Harbour Investment Partners LP. Its ownership structure looks like this:

Source: Registraire des entreprises Quebec.

Source: Registraire des entreprises Quebec.

 

As I explained in an earlier issue, a “Commanditaire” is a limited partner while a “Commandité” is the general partner. As you can see, in this case, there is really no difference between the general partner and the limited partners — the general partner is a company made up of the two limited partners. I asked a Quebec lawyer who told me this is a standard setup intended to limit the individual liability of each partner.

I’m not sure how the Novazone “partnerships” with “all 13 Nova Scotia Mi’kmaq communities” come into it. I’d like to know.

As for the current status of the project, Barbusci, who told the Post in 2015 he expected the container terminal, built and financed by the Chinese government, to be operational by 2019 and who told Truck News in 2017 the terminal would be “up and running” by 2021, told the CBC on Wednesday he “expects to sign a deal with a shipping company within the year.”

Sure.

The bright spot in this — in theory — is that Membertou Corporate is owned by Membertou First Nation and is, presumably, accountable to the people of Membertou. Maybe they can find out what in the name of twenty-foot-equivalent units Barbusci is up to…

 

P.S.

I have a postscript to add to my story about Mayor Clarke and the incredible disappearing container terminal, which is that the mayor gave a year-end interview to the Cape Breton Post’s David Jala too, and nary a word was breathed about the port.

Also, I looked up my coverage of the CBC’s 2018 year-end interview with Clarke and discovered (as I’d suspected) that the container terminal figured in it prominently. How it could be so completely absent from the 2019 version is quite a head scratcher.

 

Is toil leam IRN BRU!

The headline above is a) Gaelic for “I like Irn-Bru” (my studies continue); and b) not true.

I do not like Irn-Bru, not one little bit.

But I like the story behind it, which my sister pointed me to this week. Terry O’Reilly included the rust-colored soft drink in an episode of his CBC radio show, Under the Influence dedicated to small brands that beat giants: Irn-Bru outsells Coke in Scotland, where it was invented in 1901 to quench the thirst of Glasgow steelworkers.

It is, in fact, roughly the same color as the clouds that used to billow out of the smokestacks at Sydney Steel.

I will let O’Reilly tell you the story but I thought I’d add a nugget of information that didn’t make the radio show: in 2018, Britain introduced a sugar tax that caused the makers of Irn-Bru to change the recipe. As the Guardian explained in December:

When the recipe was changed…AG Barr, confidently predicted that most people wouldn’t notice the difference. This proved to be a tragic miscalculation. A furious campaign (“Hands off our Irn-Bru”) was launched to protest against the decision, with a change.org petition getting just under 54,000 signatures.

Things reached such a frenzied state that 2,000 people signed up to a plan to break into the factory and steal the original recipe (Scotland’s answer to the storming of the Bastille). Disappointingly, this scheme never came to fruition. But the people of Scotland spoke with their wallets – AG Barr announced that its profits this year have plummeted by 20%.

The Guardian story was not about the drop in AG Barr’s profits but about an out-of-date bottle of Irn-Bru that was being offered on e-bay for £250 (CAN$428).

Which, you have to admit,  is a steep price to pay for what amounts to an extra four teaspoons of sugar.