Puzzling Over the Port File

Each week, I pick a subject and do my research and try to give some sort of coherent account of what I’ve learned but this week — I give up.

I’ve been trying to make sense of the latest developments in the Sydney container port saga and I am utterly baffled. So there will be no coherent narrative, just a collection of facts — like the pieces to a jigsaw puzzle I’ve given up trying to assemble.

But can you blame me, when pieces like this keep turning up:

 

How am I supposed to fit former New Brunswick Premier Frank McKenna into the container port picture? It makes no sense — and yet, there he is, chair of the board of directors of Brookfield Asset Management, the Toronto-based buyout firm that (along with GIC, Singapore’s sovereign wealth fund) just bought rail operator Genesee & Wyoming — and with it, the Cape Breton and Central Nova Scotia Railway (CBNS).

Suddenly, Frank McKenna could be deciding whether the province of Nova Scotia will continue subsidizing the Cape Breton portion of the CBNS — the section from the St Peters Junction (near Point Tupper) to Sydney that G&W applied to abandon but agreed to “maintain” it in return for the (up to) $60,000 a month the province has been paying it since 2017. The stretch of line without which, our port promoter Albert Barbusci says, there will be no $1.5 billion container terminal in Sydney harbour.

I can’t decide whether McKenna obviously knows all about the rail situation because he’s been talking to his old friend (and Sydney Harbour Investment Partners international adviser) Jean Chrétien or if he was entirely unaware that the $8.4 billion, 120-line, three-continent G&W deal included a 158-km stretch of disused rail in Cape Breton. Both sound plausible to me.

And whether the government’s decision on the subsidy actually involves McKenna personally, it will apparently involve Brookfield. NS Business Minister (and Glace Bay MLA) Geoff MacLelllan said as much on Monday, telling the Post the decision whether to continue subsidizing the rail line will be made after the province speaks to Brookfield and finds out what it “thinks.”

I figure Brookfield can think one of two things: either “We’re abandoning the line, stuff your subsidy,” or “We’ll refrain from abandoning the line, thanks for the subsidy.” What either potential reaction has to do with the factor MacLellan cited all last year as key to continuing the subsidy — “significant” progress on the container port file — escapes me.

Unless, of course, Barbusci is about to announce Brookfield is a “partner” in the project. (Brookfield’s infrastructure arm owns and operates “port, rail and toll road assets moving freight, bulk commodities and passengers across five continents.”)

But the G&W deal was in the works for most of 2019, and if Barbusci had managed to get a foot in the door, he’d surely have issued some sort of press release by now, wouldn’t he?

 

Novazone

And WHAT is Chief Terry Paul up to? Membertou Corporate has bought 22.5% of SHIP — which makes it the third shareholder, along with Barbusci and Canderel, a Montreal real estate development firm.

I asked Membertou Corporate spokesperson Kelsea MacNeil how much Membertou had paid for the stake but she declined to say. I asked if Membertou would get a seat on the SHIP board (last I checked, the only directors were Barbusci and Barry Sheehy). MacNeil said they would.

Leaving aside what Membertou Corporate just bought 22.5% of — SHIP has no assets, no revenues, no nothing, as far as I can tell, but an “exclusive” deal, which expires in 2021, to promote the Port of Sydney — there’s also the question of Membertou’s existing partnership with SHIP.

This is a particularly odd piece of the puzzle — one I touched on briefly on Friday and have been mulling over, to no purpose, ever since.

According to the press release announcing the SHIP investment:

Membertou, a progressive Mi’kmaq community located only three kilometers from downtown Sydney, has an existing partnership through SHIP’s Novazone project. Novazone is a planned logistics park of more than 1250 acres which is directly adjacent to the Novaporte site. In addition to Membertou, the other 12 Nova Scotia Mi’kmaq communities are also currently major shareholders of Novazone.

I went back to look at the Option and Development Agreement for the Port that Mayor Cecil Clarke forced through council back in December 2017.

It lays out the terms under which SHIP will be allowed to either lease (for 99 years) or buy (for $10 million) the roughly 1,500 acres designated for a container terminal and logistics park.

SHIP has not yet triggered that agreement which means SHIP does not yet own or lease those lands — and yet, it is busy, apparently in partnership with “all 13 Nova Scotia Mi’kmaq communities,” developing them. And by “developing,” I mean Membertou has built a building and Barbusci has invited a Michigan company with an untested plastics-to-fuel technology to move in.

I remember Canderel CEO Jonathan Wener once saying that developing a logistics park could involve offering land to companies for nothing, which might make sense if you had a container port and were actually attracting logistics firms but what if you don’t have a container port and are attracting companies that want to use your land to stockpile plastic garbage?

As I mull it over I realize that, port or no port, SHIP seems to have a free hand to do what it wants with the “Novazone” land and I’m inclined to agree with my Facebook friends who say the bigger the role Membertou Corporate (and the province’s other Mi’kmaq communities) play in this the better. Although I’m not impressed by the roundabout route we’ve had to take to get here and I know there’s more happening here than meets the eye.

 

Duty-bound

While reading about the Option and Development Agreement, I took the opportunity to jog my memory as to what, exactly, SHIP has to do to trigger it. According to the original, 2015 exclusivity agreement between the CBRM and what was then HPDP:

For greater certainty, the parties, acting reasonably, agree that the Development Agreement shall only be exercised at a time in which:

a) HPDP has identified a viable scheme for the operation of an international container terminal;

b) HPDP has delivered associated financial projections and aggregate construction costs;

c) The Parties have reached final agreement with respect to the financial return of CBRM on the Project…

Under “duties” HPDP was tasked with using its “best efforts to develop a consortium of equity partners for development of a state of the art container terminal for the Port of Sydney.”

Five years in, Barbusci’s equity partners are Canderel and Membertou — a First Nations Community located within the CBRM.

Did we really need a Montreal-based port “developer” to swing that deal for us?

 

Bits & Bobs

In case you missed it, Barbusci, in addition to “making transportation history” with his container port scheme is now “nation building.” You know it must be true, he put it in a press release:

SHIP CEO, Albert Barbusci, pointed to Novazone and Novaporte as exemplary models of private sector nation-to-nation collaboration and partnership. “This project will change transportation patterns in eastern North America and catalyze the Atlantic Gateway,” remarked Barbusci. “This is a model of nation-building with Indigenous participation and leadership; an important model for all projects moving forward.”

(The phrase “private sector nation-to-nation collaboration” seems to suggest Barbusci thinks SHIP is a nation.)

The press release also adds “the infrastructure to support electric vehicles” to the imaginary container port and SHIP apparently now has a “VP of Special Projects” named Simon Kubski.

Kubski, according to his LinkedIn bio, is an “innovation architect, instigator, disrupter, entrepreneur, coach and facilitator.”

I’m pretty sure it’s the right Kubski because his work experience includes “Vice President of International Business Development” with the Sun Redrock Group from 2008 to 2011.

I recognized Sun Redrock as one of those companies Barbusci and Sheehy have (almost) done business with before — back in 2010 when they were transitioning their online mahjong company into a Chinese memorial park company into a gold and copper mining company they:

…purchased of all of the issued and outstanding shares in the share capital of BZ BVI from Sun Thinktank Creative Holdings Limited (formerly Redrock Thinktank Group Ltd.) (“Redrock”);

…As a result of the closing of the above transaction, there are a total of 58,901,420 Blue Zen Shares outstanding of which: (i) Redrock and Tiandilong each hold 22,500,000

Barbusci has a quilter’s mentality, I think — never throw anything away.

Blue_Zen_02

Puzzling

Do you know what I think my problem is? It’s that I’ve been assuming that Barbusci’s puzzle will end up looking like the picture on the box — a container terminal — when that’s not the way Barbusci rolls at all.

He’s not quietly and doggedly assembling a consortium of companies that could build and operate a container terminal, he’s signing anything he can with anyone who’ll sign.

The final product (if there ever actually is one) will probably look just as crazy as the process that created it.