The trouble at NTCL: 5 things you need to know

The waters are getting increasingly rough forNorthern Transportation Company Ltd., the Northern sealift company that has been serving the Western Arctic for almost 70 years but whose future is becoming cloudier by the day.

On Wednesday, employees, including several from the company's operating base, Hay River, were put on alert to expect potentially permanent layoffs not the standard-order dismissals that come every year near the end of the shipping season.

"What we do know is that there probably will not be an NTCL in the near future,"SteveIngram, NTCL's shipyard and marine manager in Hay River, wrote employees in an email Wednesday.

"I would strongly suggest that you remove all personal tools and equipment that you may have at this location; as future access may not be feasible, or available."

Today, the company's lawyers will argue in Alberta court that NTCL should be allowed to cut back its payments into the pension fund forover 600 current and formeremployees.

• With no buyer in sight, NTCL looks to cut pension payments

Before the story escalates even further, here's a quick primer on how things go to this point and what it allmeans for Northerners.

Is NTCL going bankrupt?

No. It hasn't filed for bankruptcy, but that's looking more and more likely.

Back in April, the company received court protection from the banks and other creditors it owes money to.

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

It owes a lot: $130 million to a syndicate of banks, according to the latest tally, plus $9.3 million to the company that sold it several double-hulled barges (the shipping industry standard), to say nothing of the dozens of other groups, including the Town of Hay River, waiting on the company to pay its taxes and bills.

NTCL's original plan was twofold: to keep supplies moving into the Western Arctic this year, and to attempt a "restructuring" of the company to keep it alive for years to come.

The former has happened, despite increasingly common hiccups likelow water levels.

But is someone likely to take over the company?

No. The company has recently said so itself.

NTCL has been seeking bids for both the company as a whole and individual assets since going under creditor protection.

While vessels and pieces of property have received "significant" interest, "to date there are no companies who expressed an interest in continuing the company as a going concern," the company's monitor wrote in his latest report on Aug. 12.

Therefore a restructuring of the company is now "highly unlikely," both the monitor, Sean Fleming of Pricewaterhouse Cooper,and Kyle Barsi, NTCL's vice president of finance, concluded.

The company's costly pension is partly to blame, says Barsi.

"I... believe that the existence of the pension plan was a significant impediment to identifying a purchaser who wished to continue the business of NTCL in the manner in which it has historically operated."

• With no buyer in sight, NTCL looks to cut pension payments

How much longer is NTCL protected from its creditors?

Until Sept. 22,which coincides with the end of the sealift season.

The big question is whether the banks owed $130 million which have thus far remained patient as NTCLattempted to retool itself will finally come knocking.

One unhelpful factor: according to an early estimate cited by Barsi, the money NTCL would make selling what assets have garnered interest would be "well below" what it needs to pay off the banks.

How did things get so bad for NTCL?

That's what everyone is asking themselves.

Here's what Mark Fleming, the vice president of NorTerra the Inuvialuit-owned, Edmonton-based holding company that controlled NTCL in recent years had to offer in an statement emailed to CBC Thursday.

"Over the past fifteen years, the economic and operating circumstances under which NTCL operates changed dramatically, including the division of the N.W.T., the almost complete decline of oil and gas activity in the Mackenzie Valley and Beaufort Sea, the extension of roads in the NWT, and low water levels," wrote Fleming.

"NTCL continued to subsidize operations by up to $10 million per year in order to ensure continued service delivery of critical goods to the people of the Western Arctic.This has meant absorbing substantial costs for increased fuel prices, fair wages for employees, and contributing to the employee pension fund in a time of historically low interest rates.

"All of which, combined, were a significant drain on NTCL financial resources. Without NTCL's shipments and continued financial support over the years, many people living in these remote communities would not have had access to basic necessities like fuel, food, home goods and hunting equipment, which are critical to their survival and their livelihood."

The sheer amount of debt generated by NTCL, however, hassparked questions of mismanagement byNorterra.

"I find it hard to believe that there's that much debt," says Mark Lyon, a former NTCL senior electrician and union local president living in Hay River.

"I mean, who would loan money to a company that has $44 million in assets, and they're going to loan them $130 million?"

What would the loss of NTCL mean for the North?

It would signal the demise of a company and former Crown corporation that's been operating in one form or another since 1934, and in the Western Arctic since at least 1957.

"This is a really sad situation because this company has been in business for over 80 years and I think a lot of their problems were due to mismanagement, and when they realized it, it was almost too late to save," says Teresa Eschuk, the regional vice-president of the Union of Canadian Transportation Employees, which represents 49 NTCL workers.

The death of NTCL would also close off a potential source of revenue for the Inuvialuit Development Corporation, which owns NorTerra and NTCL, and therefore Inuvialuit beneficiaries also hurting from the lack of oil and gas activity.

And that's to say nothingof all the contingencyplanning some of it already underway that will need to happen if NTCL indeed proves unable to carry out the 2017 sealift.