ORDER NUMBER
G-97-16
IN THE MATTER OF
the Utilities Commission Act, RSBC 1996, Chapter 473
and
Kyuquot Power Ltd.
Application for Variance in Debt Financing
BEFORE:
D. M. Morton, Commissioner
H. G. Harowitz, Commissioner
R. D. Revel, Commissioner
on June 23, 2016
ORDER
WHEREAS:
A. On May 24, 2016, Kyuquot Power Ltd. (KPL) applied to the British Columbia Utilities Commission (Commission) to amend its current lending agreement with the Canadian Western Bank (CWB) for a period of one to four years at a fixed interest rate no higher than 5.04 percent per annum over a 10 year amortization period (Application);
B. In the Application, KPL also requested an increase in the principal balance of the loan to about $750,000;
C. KPL is a wholly owned subsidiary of Synex Energy Resources Ltd. (SERL) whose parent is Synex International Inc. (SI), a publically traded company on the Toronto Stock Exchange;
D. The current lending agreement with CWB was most recently approved by the Commission pursuant to Order G-105-13 with the following terms: three year fixed term, effective July 31, 2013; fixed interest rate of 4.88 percent; principal amount of $700,000; ten year amortization period. Upon expiry, on July 31, 2016, the interest rate reverts to a floating rate of CWB business prime rate (currently 2.7 percent) plus 2 percent;
E. The outstanding balance on the existing CWB loan as of March 31, 2016, is $545,292;
F. Both the currently approved lending agreement and the requested amended lending agreement require a guarantee from SERL, SI and Sigma Engineering Ltd. (Affiliated Companies);
G. Pursuant to Order G-05-06, an additional 0.5 percent is paid to the Affiliated Companies to account for the security and guarantees required by CWB;
H. Pursuant to Order G-158-14, KPL has an approved (deemed) debt to equity ratio of 60 percent debt and 40 percent equity. As of June 30, 2015, KPL’s deemed debt is $845,575; and
I. The Commission has reviewed the Application along with the supporting materials and finds that approval is warranted.
NOW THEREFORE pursuant to section 50 of the Utilities Commission Act, the British Columbia Utilities Commission orders as follows:
1. Kyuquot Power Ltd.’s (KPL) application to amend its current lending agreement for a fixed term interest rate not to exceed 5.04 percent per annum is approved.
2. KPL’s request to increase the amount of lending provided by the Canadian Western Bank to a total of $750,000 is approved.
3. KPL must advise the British Columbia Utilities Commission of the actual fixed term interest rate following conversion of the outstanding loan.
DATED at the City of Vancouver, in the Province of British Columbia, this 23rd day of June 2016.
BY ORDER
Original signed by:
D. M. Morton
Commissioner