ATLANTIC

N.S. does not owe $2 million to former Yarmouth ferry operator: minister

Keith Doucette THE CANADIAN PRESS
Published Tuesday, November 17, 2015 4:40PM AST Last Updated Tuesday, November 17, 2015 5:59PM AST

A Casco Bay Lines ferry passes by the Nova Star ferry as the 528-foot, $165 million ship prepares to make its maiden voyage from Portland, Maine to Yarmouth, Nova Scotia on May 15, 2014. (AP Photo/Robert F. Bukaty)

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HALIFAX -- A claim the province owes $2 million to the former operator of the ferry from Yarmouth, N.S., to Portland, Maine was categorically rejected by Nova Scotia's transportation minister Tuesday.

Geoffrey McClelland said the provincial government had fulfilled its contractual obligations to Nova Star Cruises and does not owe any outstanding funds.

MacLellan was responding to Nova Star president Mark Amundsen, who said the company is contractually owed the money used to post a bond to satisfy U.S. regulations requiring a guarantee to refund ticket sales if necessary.

"We've had significant legal opinion and perspective on this," said MacLellan. "We do not owe the Nova Star any money, including the $2 million for this bond."

MacLellan said the money from the bond, which was part of the initial $21 million fund used by the ferry in its inaugural 2014 sailing season, was returned to the province in July.

He said the bond was meant to help the company get to the point where it could set up its own escrow account to cover the U.S. requirement. MacLellan said it's a point that was made clear in several direct conversations with Nova Star.

"It was finalized in July. The bond was never mentioned at any point from July until today," MacLellan said.

In a statement, Amundsen said the company owes about $200,000 to vendors and suppliers in Nova Scotia, and the outstanding amount could be used to pay those bills and others in the U.S.

"Despite repeated requests, the province chose not to disperse those funds to Nova Star Cruises, leaving the company with a $2 million shortfall," said Amundsen.

The cash-strapped company operated the ferry for the last two years, but was significantly short of its passenger targets. It was passed over when the province opted last month to go with Bay Ferries as the new operator in 2016.

Nova Star had received a total of $39.5 million in provincial subsidies -- a figure that doesn't include the $2 million bond now in dispute.

Amundsen said the company requested the return of the bond money when it became clear ticket sales weren't going to cover all of its operating costs.

He said he also wrote a letter in late August saying the company intended to halt the service a month ahead of schedule because "the passenger volume is well below the level necessary to support a commercially viable service."

Amundsen said the company was asked by the province to continue the service until its scheduled end date in mid-October, meaning additional costs accumulated.

MacLellan said he received the Aug. 28 letter, and there were discussions, but that the company decided to continue.

"At the end of the day . . . Mark Amundsen freely continued to fulfil his obligation for the 2015 season. During that time the bond was not mentioned."