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From the Thursday, June 28, 2007 Cape Breton Post

Cape Breton Casting gets a reprieve

Sydney group expected to take over

Section: Business

By Wes Stewart, Cape Breton Post

The process is now in place to allow the divestiture of Cape Breton Casting, a die-cast manufacturing plant in the Northside Industrial Park.

Speculation has a business group headed by Sydney businessman Jim Kehoe as the new owners.

Enterprise Cape Breton Corp. spokesman D.A. Landry said Wednesday a new Cape Breton Growth Fund board comprising management and board members of ECBC was appointed this week to facilitate the sale of the die-cast plant and wind up the fund.

The growth fund, in a release, said it is in the final stages of negotiation for the sale of the assets of Cape Breton Casting Inc. as a going concern. A letter of intent has been agreed upon, however an announcement of the details of the transaction cannot be made until a formal agreement of purchase and sale has been signed. This should happen in the near future.

Given an agreement is pending, the growth fund board has agreed to continue operating the Casting plant beyond the July 1 deadline it previously imposed, to facilitate a smooth transition to the new owners. Upon completion of the agreement of purchase and sale, a detailed announcement will be made.

CBCI, located in the Northside Industrial Park, was established in 2004 to provide die-casting services to the automotive industry. The project received $24.7 million of repayable assistance from the growth fund, the Atlantic Canada Opportunities Agency and ECBC.

The growth fund took control of the plant in March 2006, when the project proponents encountered difficulty and surrendered their shares.

In December 2006, the growth fund board committed to operate Cape Breton Castings until July 1 while efforts were put in place to sell the plant. A public call for proposals was made in May 2007, for the sale of the assets. A total of five proposals were received and each was evaluated by Ernst & Young Orenda Corporate Finance Inc., who acted as agents for the sale.

The plant employs approximately 60 people.

The Cape Breton Growth Fund is a wholly owned subsidiary of ECBC. Established in 2000 to administer incremental economic development funds provided by the federal and provincial governments in the wake of the decision to discontinue the operations of Island's coal mines, the growth fund has a mandate to assist in the transition of the Cape Breton economy.

Landry said the growth fund when it was set up, while legally viewed as a subsidiary of ECBC, it was treated as a separate Crown corporation with a separate board appointed by order-in-council.

As of this week, the growth fund is now a normal subsidiary of ECBC and as the parent Crown corporation appointed a new board of directors - ECBC board members Frank MacInnis and Bob Munroe, and ECBC management personnel Marlene Usher, Lori Marenick and D.A. Landry.

The boards work together to ratify the decision of the growth fund board leading to the divestiture of the Casting plant and as the remaining funds are committed the growth fund will be dissolved and rolled into ECBC, he said.

There is approximately $4 million remaining in the growth fund.

Unfortunately, I'm having computer problems right now, so the rest of the updates will have to wait.