Nova Scotia-based wind turbine tower manufacturer DSME Trenton (DSTN), a joint venture between the government of Nova Scotia and Korea-based Daewoo Shipbuilding and Marine Engineering (DSME), is ceasing operations permanently.
As primary secured creditor, the Nova Scotia government says it will exercise its right to file for receivership proceedings to try to recover as much of its investment as possible.
“DSTN’s future prospects have not improved over the past year, and the domestic wind tower market is well below expectations,” explains Nova Scotia Business Minister Mark Furey. “Government has few options except to prevent the risk of further loss while ensuring all assets are returned to Nova Scotians.
“I know this is a difficult time for employees, their families and many people in the community who worked very hard to support this project,” he continues. “I share in your disappointment and offer my sincerest gratitude for your efforts. I also want to offer my thanks to our partners at DSME in Korea, and my regret that this joint venture was not successful.”
In 2010, the Nova Scotia government committed up to C$59.4 million to DSTN. This included C$19.6 million for 49% of the company’s common shares, C$36 million in repayable loans and a C$3.8 million forgivable loan. C$56.3 million has been disbursed to the company. DSTN has informed the government that it is not in a position to start payment on the repayable loans, which was scheduled to begin in early 2018.
According to the government, DSTN has indicated it has several million dollars in cash, equipment and property. The government says taking action now will minimize the potential cost to taxpayers for any environmental cleanup or receivership fees.
The government says DSTN has no customer orders and has been operating in a maintenance mode with 19 active employees. Continued operations in this condition are estimated to cost about C$400,000 per month just to stay open. After more than five years in operation, DSTN did not make money on any contracts or achieve job targets.
“Government did everything reasonably possible to help the company become profitable, including supporting an investment attraction initiative that did not find any new customers or investors,” states Furey. “Converting the facility to another use, such as manufacturing pressurized railcars, would have required another multimillion-dollar investment from taxpayers. This is simply not affordable and would have a limited chance of success.”