Crazy but True! – BC Ferries Debt

April Fools Day 2003 is when BC Ferries started to go into debt, all thanks to the Provincial Government.

This is how it happened.

Step #1 –

Take a Crown Corporation that you the Taxpayer own, and convert it into a Company.

Step #2 –

The Crown Corporation that you owned is now turned into a Company that you still kind of own as the shareholder (non voting). So the Company that you still kind of own, and will own once the voting share is activated, had to go out and issue bonds to pay the Province back for the Crown Corporation that you had owned.

Confused yet?

BC Ferry Corporation, owned by the Province, you the taxpayer, was sold to BC Ferries Inc. which you still kind of own as the shareholder for $427 million to the Province.

“Our bond issue was extremely well received and is confirmation that our company is well accepted by the financial markets. We used the funds to repay the $428 million debt owed to the Province of B.C.” said Hahn. August 13^th, 2004

 …

$250,000,000

5.74% Senior Secured Bonds, Series 04-1, due May 27, 2014

Basically the first set of borrowings that BC Ferry Services Inc. had to do, now coming due, which is one of the contributing factors in the losses BC Ferries is now facing, is to pay for a Ferry Company that you used to own, and still kind of do.

Crazy but True.