Baie Verte Mines Inc. Regulations
APPROPRIATION ACT NO. 1, 1980-81
APPROPRIATION ACT NO. 2, 1981-82
Regulations Respecting Loans and Insurance of Loans Made to Baie Verte Mines Inc.
P.C. 1982-2953 1982-09-22His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, Trade and Commerce and the Treasury Board, pursuant to Industry, Trade and Commerce Vote 1a of Appropriation Act No. 1, 1980-81 and Industry, Trade and Commerce Vote L35 of Appropriation Act No. 2, 1981-82, is pleased hereby to make the annexed Regulations respecting loans and insurance of loans made to Baie Verte Mines Inc.Short Title
1 These Regulations may be cited as the Baie Verte Mines Inc. Regulations.
2 In these Regulations,
Baie Verte Mines Inc.
Baie Verte Mines Inc. means a company incorporated with that name under the laws of the Province of Ontario and having its head office in the City of Toronto in that province; (Baie Verte Mines Inc.)
private lender means any lender other than
(a) the Government of Canada,
(b) the government of any province of Canada,
(c) an agency of any government referred to in paragraph (a) or (b) or any company that is effectively controlled by any such government or any agency thereof, or
(d) any municipal corporation. (prêteur privé)
3 The Minister of Industry, Trade and Commerce may provide loans to Baie Verte Mines Inc. up to $13 million in the aggregate in accordance with the terms and conditions set out in the draft agreement between the Minister of Regional Economic Expansion and Baie Verte Mines Inc. set out in the schedule.
4 The Minister of Industry, Trade and Commerce may provide insurance for the full amount of any loss that may result in respect of any loan made by a private lender to Baie Verte Mines Inc. up to $1 million in the aggregate.
Application for Loans and Insurance
5 Application for loans and insurance for loans referred to in sections 3 and 4 shall be made to the Minister of Industry, Trade and Commerce and shall contain such information and documents relating to the application as the Minister may require.
Payment of Insurance
6 Where a private lender demands repayment of a loan referred to in section 4 in respect of which insurance has been provided pursuant to that section, the amount of such insurance payable to the private lender shall not exceed the amount of insurance in effect on the date of such demand.
7 These Regulations come into force on September 20, 1982.
made this day of , 1982.
THE GOVERNMENT OF CANADA, (hereinafter referred to as “Canada”) represented by the Minister of Regional Economic Expansion
OF THE FIRST PART,
Baie Verte Mines Inc., a wholly owned subsidiary of Transpacific Asbestos Inc., incorporated under the Laws of Ontario, and having its registered office at the City of Toronto, in the Province of Ontario (hereinafter referred to as “the Company”)
OF THE SECOND PART.
Whereas pursuant to section 6 of the Department of Regional Economic Expansion Act, the Governor in Council, after consultation with the Province of Newfoundland, has by Order in Council P.C. 1982-2952 of the 22nd of September, 1982Footnote 1 designated, for the period August 1, 1982 to March 31, 1987, the area in the Province of Newfoundland described in Schedule “A” hereto, as a Special Area requiring special measures to facilitate the reactivation of the asbestos mine at Baie Verte;
Return to footnote 1SOR/82-880, 1982 Canada Gazette Part II, p. 3255
And Whereas Canada and the Province have agreed that the maintenance of the economic viability of the Baie Verte region merits special attention, and have further agreed that special measures be undertaken in this regard to improve employment levels;
And Whereas Canada and the Province agree to share in measures to assist in the reactivation of the asbestos mine in Baie Verte, consistent with the objectives stated in section 3 of the General Development Agreement (GDA) made between Canada and the Province bearing the date the 1st day of February, 1974;
And Whereas the Company has agreed to implement a reactivation program in respect of the asbestos mine and milling facilities, formerly operated by Advocate Mines Limited, at Baie Verte, Newfoundland;
And Whereas Canada has agreed to issue an incentive to the Company in the form of loans for operating capital in respect to the costs incurred by the Company pertaining to the implementation of the said reactivation program;
And Whereas the Minister of Industry, Trade and Commerce has agreed to participate in the financial assistance to be provided to the Company under this Agreement.
Therefore, the parties hereto covenant and agree each with the other as follows:
SECTION 1 — DEFINITIONS
1 In this Agreement:
(a) approved levels means, with respect to section 6.1 (b), the level of employment as approved from time to time by the Monitoring Committee;
(b) approved plans means, with respect to section 6.1 (a), the plan of operation as approved from time to time by the Monitoring Committee;
(c) control period means the period commencing on May 13, 1982 and terminating on March 31, 1987;
(d) eligible expenditures means those expenditures approved for reimbursement by the Monitoring Committee;
(e) federal financial authority insofar as it relates to the disbursement of operating funds, means the “Minister”;
(f) incentive means a financial contribution to the private sector program identified under this Agreement;
(g) line of credit means funds required to finance the buildup of milled fibre inventory;
(h) Minister means the Minister of Regional Economic Expansion of Canada and includes anyone authorized to act on his behalf
(i) Monitoring Committee means the committee referred to in section 5 of this Agreement;
(j) operating capital means funds required to finance the cost of overburden removal and operating shortfalls;
(k) pre-tax profits of the Company means the net income for such period from all sources before charging or making provision for taxes on income and capital gains of the Company computed in accordance with generally accepted accounting principles but without including as an expense any amount of interest payable to Canada under this Agreement;
(l) program means a series of specific and related activities, as referred to in Schedule “B”
(m) progress claim means the document requesting payment of federal funds for use in financing operations for the following month
(n) Special Area means the area described in Schedule “A” attached hereto.
SECTION II — UNDERTAKING OF THE COMPANY
2.1 The Company agrees to undertake in a diligent manner a reactivation program in respect to the asbestos mine at Baie Verte, Newfoundland, in accordance with the particulars contained in Schedule “B” attached hereto and forming part of this Agreement.
2.2 The Company agrees to provide Canada with assurances regarding inter and intra company financial transactions of the Baie Verte operation. In particular, the Company agrees to the conditions outlined in Schedule “C” attached hereto and forming part of this Agreement.
2.3 The Company shall indemnify and save harmless Canada, its officers, servants, and agents, against all claims and demands of third parties in any way arising out of the implementation of the program, except as such claims or demands relate to the act or negligence of any officer, employee or agent of Canada.
SECTION III — REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that its projections provided for the purpose of obtaining the incentive have been prepared in good faith based upon management’s best estimates of the economic considerations reflected in such projections and that the Company has no reason to believe that such projections are inaccurate in any material aspect. The Company further represents and warrants that all statements of fact contained in any documents, materials and information provided for the purpose of obtaining the incentive are true and correct in all material aspects.
3.2 If the Company shall be in breach of its representations and warranties contained in section 3.1, Canada may consider its obligations under this Agreement to be at an end and may require the Company or Transpacific Asbestos Inc. to repay any amount caused to be paid to the Company hereunder, and the Company agrees that such amount immediately become due and owing and to repay such amount promptly. (Schedule “D”)
SECTION IV — FINANCING
4.1 As the Company performs its obligations under this Agreement and subject to section 4.4, it shall receive from Canada, in the form of loans as provided for herein, a sum not to exceed thirteen million dollars ($13,000,000).
4.2 Where financing by Canada of the program is wholly or partly on a loan basis, the Company will repay the loan to Canada with interest as follows:
(a) Simple interest with respect to all payments made by Canada shall be calculated from the date of each payment at the Bank of Canada rate plus one per cent (1%). The rate set at the beginning of each quarter will apply during that quarter. Interest accrued to March 1, 1987, shall be capitalized as at said date and shall be added to the principal amount of each payment and the total amount shall be deemed to be principal for the purposes of paragraphs (b) and (c). The principal amounts of each payment, including the accrued interest, shall be treated as a single sum and simple interest shall be charged on such single sum at a rate computed as a weighted average of all the rates borne by each of the payments comprising such single sum
(b) On March 1, 1987, and March 1 in each year thereafter, until the principal amount of the loan and interest thereon calculated as set out in paragraph (a) shall have been paid in full, the Company shall make a payment equal to thirty per cent (30%) of the pre-tax profits of the Company for the last fiscal year of the Company completed prior to such payment date provided that the last such payment shall be limited to an amount necessary to repay, in full, the then outstanding balance of the principal amount of the loan plus accrued unpaid interest thereon to the date of payment. Each such payment made by the Company shall be applied firstly to payment of accrued unpaid interest on the outstanding principal amount of the loan to the date of payment and secondly to repayment of the outstanding principal amount of the loan;
(c) Notwithstanding the foregoing, the Company may, at any time and from time to time when not in default hereunder, prepay all or any part of the principal amount of the loan and interest thereon without notice or bonus provided that any such prepayment shall not be applied to principal while any accrued unpaid interest is outstanding
4.3 If, in the opinion of the Minister, as a result of an annual assessment or at any other appropriate time, the operation is no longer viable, no further contributions shall be made except for contributions previously approved by the Monitoring Committee and the Agreement shall be terminated. In any event, this Agreement shall terminate on March 31, 1987, and Canada shall make no payments after March 31, 1985.
4.4 Canada agrees to provide financing in the form of loans to the Company in the following manner:
(a) for the period ending March 31, 1984, a sum of nine million dollars ($9,000,000);
(b) for the fiscal year ending March 31, 1985, a determination will be made by the federal financial authority as to whether any additional amount not to exceed four million dollars ($4,000,000) will be advanced
provided that Canada may, in its sole judgement, accelerate any payment to be made to the Company under this subsection up to the maximum of thirteen million dollars ($13,000,000).
4.5 Subject to subsection 4.4, payments toward operating capital requirements shall be made at the request of the Company on approval of the federal financial authority.
4.6 The eligible costs to be financed by Canada shall not include any costs relating to the acquisition by the Company of lands and buildings or interests in lands and buildings, or any costs arising from conditions of acquisition.
4.7 In addition to the thirteen million dollars ($13,000,000) in direct loans, Cabinet has also approved a federal loan guarantee of one million dollars ($1,000,000). The loan guarantee will be provided to the Royal Bank of Canada, or other authorized institutions, to the extent of twenty-five per cent (25%) of line of credit funds drawn down by the Company, but not to exceed one million dollars ($1,000,000). A separate loan guarantee agreement will be signed following the finalization of banking arrangements and the concurrence of the Minister of Finance in this regard.
SECTION V — MANAGEMENT AND ADMINISTRATION
5.1 Canada, in consultation with the Government of Newfoundland and Labrador, will designate a Monitoring Committee as the body whose function it is to administer this Agreement on behalf of Canada. The officials comprising the Monitoring Committee shall oversee the development and implementation of the Company’s expenditure program and shall recommend to the federal financial authority the amount and timing of fund disbursement.
5.2 The Monitoring Committee shall during the control period:
(a) monitor and analyze various aspects of the Company’s operations with particular emphasis on technical, financial and marketing considerations;
(b) assess, on a continuous basis, the viability (short and long-term) of the operation in order to make recommendations with respect to approving the expenditure of public funds;
(c) evaluate monthly cash requirements and make recommendations with regard to disbursement of monthly cash advances;
(d) produce annual status reports and make periodic recommendations with respect to continued support for the operation;
(e) ensure that the Company is not acting in contravention of any of the terms and conditions of this Agreement;
provided that the Monitoring Committee shall not interfere with the day-to-day operations of the Company
5.3 The Minister shall require monthly progress reports, as well as audited statements and reports, certificates of completion, or such other evidence as is deemed appropriate to confirm that the Company has expended monies in accordance with the terms of this Agreement.
5.4 During the period commencing on the date of this Agreement and ending on the expiration of the control period, the Company shall submit to the Monitoring Committee as a part of each progress claim submitted, a status report providing the information set forth in Schedule “E” attached hereto and forming part of this Agreement, against which compliance with the Company’s obligations under this Agreement can be assessed.
5.5 The Company shall keep proper books, accounts, invoices and records relating to the Company’s obligations under this Agreement, and Canada may cause the same to be examined and audited at any time during reasonable business hours to determine if the obligations of the Company are being met. Notwithstanding anything in this section, the Monitoring Committee may request of the Company at any time reports relating to any of the Company’s obligations.
5.6 In respect of the period commencing on the date of this Agreement and ending at the expiration of the control period, the Company will, within 120 days of its fiscal year end, provide to the Monitoring Committee, a copy of its audited annual financial statement together with a report of the Company’s external auditors certifying that the auditors are familiar with the covenants of the Company contained in Section II of this Agreement, and that no breach of covenants came to their attention in the course of their review of the accounting records of the Company except as set out in their report. Within 120 days of the expiration of the program, the Company’s external auditors shall provide the Monitoring Committee with a report providing the information set forth in Schedule “F” attached hereto.
5.7 The Company agrees to provide the Monitoring Committee with such access to the Baie Verte facility as the Committee requires.
5.8 The Company agrees to cooperate fully with Canada and the Province in the implementation of a public information program and hereby authorizes Canada and the Province to carry out such a program.
SECTION VI — CHANGE IN PLANS
6.1 If, in the opinion of the Monitoring Committee:
(a) the Company makes a significant change in the program or fails substantially to carry out approved plans without having obtained the prior written approval of the Monitoring Committee; or
(b) the Company, without having obtained the prior written approval of the Monitoring Committee, significantly decreases employment below approved levels during the control period.
Canada may consider its obligation under this Agreement to be at an end and may require the Company to repay any amount paid to or on behalf of the Company hereunder, and in that event the Company agrees that such amount immediately becomes a debt due and owing, and agrees to repay such amount forthwith to Canada.
SECTION VII — ENVIRONMENTAL REQUIREMENTS
7.1 It is a condition of the incentive, or any part thereof, being paid or payable hereunder that all environmental protection measures be incorporated and utilized which meet the requirements respecting the control of pollutants established by all relevant governments or agencies thereof.
SECTION VIII — GENERAL
8.1 [Revoked, SOR/86-263, s. 1]
8.2 This Agreement shall not be assigned by the Company without the prior written consent of Canada.
8.3 No member of the House of Commons of Canada shall be admitted to any part or share of payments made pursuant to this Agreement or to any benefits to arise therefrom.
Executed on the day and year first written.
GOVERNMENT OF CANADA
Minister of Regional
EXECUTED by the Company by affixing its corporate seal, attested by its proper officers in that behalf and accompanied by a certified extract from the By-laws of the Company.
Baie Verte Mines Inc.
SOR/83-83, s. 1(F);
SOR/86-263, s. 1.
SCHEDULE “A”Special Areas Agreement Baie Verte Mines Incorporated
The Special Area is defined as that region of Newfoundland which is comprised of an area of the Baie Verte Peninsula, shown on Statistics Canada Map 4 — Northeastern Part, Newfoundland, 1981 more particularly known as the Census Subdivision of Baie Verte.
SOR/83-83, s. 1(F).
SCHEDULE “B”Special Areas Agreement Baie Verte Mines Incorporated
The reactivation program to be carried out by Baie Verte Mines Inc. will include, but not necessarily be limited to:
1 operating the mine according to a mining plan as approved from time to time by the Monitoring Committee;
2 milling the mine’s output to obtain the maximum fibre content that is economically feasible and consistent with good environmental practices;
3 undertaking an appropriate overburden removal program of waste rock with a view to orderly exploitation of the resources to its optimum, long-term economic potential;
4 developing a marketing strategy which will actively seek and develop markets for the mine’s output;
5 maximizing employment opportunities consistent with efficient mining and milling practices.
SOR/83-83, s. 1(F).
SCHEDULE “C”Special Conditions
1 It is acknowledged that income earned by the Company will constitute consolidated adjusted pre-tax profits of Transpacific Asbestos Inc. (“Transpacific”) and must be taken into account in determining Transpacific’s obligation to pay interest on its 11% Debenture due March 31, 1987. The Company shall be permitted to pay to Transpacific each year from the company’s net income, after making or providing for the payment referred to in paragraph (b) of section 4.2, sufficient funds to enable Transpacific to make payments of interest on such Debentures which arise from the Company’s pro rata involvement in the consolidated adjusted pre-tax profits of Transpacific. Transpacific shall be entitled to reimbursement from the Company for those initial expenditures made on behalf of the Company which are eligible expenditures under this Agreement. Except as provided in this paragraph 1 and in paragraph 2, until all monies owing to Canada, and interest thereon have been paid in full, funds supplied to or generated by the Company will be used for the Company’s operations and will not be transferred to Transpacific or any other company in which Transpacific has an interest
2 Management fees to parties outside the Company are not anticipated. Should a need for fees of this nature arise, approval of the Minister will be required
3 Remuneration and benefits to Company officials and sales commissions will be fair and reasonable and in line with industry averages.
4 Canada may, at its option, appoint representatives to act as observers or Directors on the Company’s Board of Directors.
5 The Company will submit its annual budget in September of each year of the Agreement to the Minister for approval.
6 Should operations cease for any reason, Canada would be entitled to participate in the proceeds of the disposition of assets as follows:
Fixed assets — Third Charge after the Royal Bank of Canada and the Government of Newfoundland and Labrador.
Stores — Third Charge after the Royal Bank of Canada and the Government of Newfoundland and Labrador.
7 Under this Agreement, Canadian material, machinery and equipment, consulting and other professional services shall be used to the extent to which these items are procurable and consistent with the economy and efficiency, as agreed upon by the Monitoring Committee.
8 The Company agrees to observe the 6%-5% guidelines as a maximum increase for wages and salaries in respect to its management and its non-unionized and unionized employees.
SOR/83-83, s. 1(F).
SCHEDULE “D”(Corporate Letterhead)
To the Government of Canada as Represented by the Minister of Regional Economic Expansion
Transpacific Asbestos Inc., a Company incorporated under the laws of Ontario and having its head office at the City of Toronto, in the Province of Ontario, in consideration of the Government of Canada entering into an Agreement with Baie Verte Mines Inc., pursuant to which Agreement the Government of Canada agreed to provide Baie Verte Mines Inc. with an incentive in the form of loans not to exceed $13 million for the purpose of the reactivation of the asbestos mine at Baie Verte, Newfoundland, HEREBY GUARANTEES to the Government of Canada, for a period of three years from the date of this guarantee, that in the event that any statement of fact contained in the plans, documents, materials or information provided by Baie Verte Mines Inc. or Transpacific Asbestos Inc. to the Government of Canada for the purpose of obtaining the said incentive are false or untrue in any material aspect, it will repay to the Government of Canada any amount paid to Baie Verte Mines Inc. under the aforesaid Agreement, Dated at this day of , 1982.
TRANSPACIFIC ASBESTOS INC.
SOR/83-83, s. 1(F).
SCHEDULE “E”Status Report
As part of each progress claim submitted, the Company is to supply to the Monitoring Committee a status report summarizing results achieved by the program
This report shall include at least the following information:
1) a program cost statement providing details of costs incurred to date for mining, milling, and marketing, projected costs to be incurred over the remainder of the year, the following year and to completion;
2) a narrative statement of work completed during the claim period and an identification of any major changes proposed in scope or scheduling, particularly in the mine;
3) a statement of employment levels at the end of the previous claim period and an estimate of projected employment levels for the current claim period.
SOR/83-83, s. 1(F).
SCHEDULE “F”Final Report
At the conclusion of the program, the Company’s external auditors are to supply to the Monitoring Committee a report summarizing results achieved by the program.
This report shall include at least the following information:
1) the actual versus the estimated costs of the mining, milling and marketing programs;
2) the final employment implications of the completed reactivation program;
3) an estimate of the person-hours dedicated to each of the programs as noted in 1) above;
4) sufficient information in regard to estimated and actual costs so as to permit evaluation in regard to program effectiveness and efficiency.
SOR/83-83, s. 1(F).