© Joey Smith - Truro Daily News
The Nova Scotia Provincial Exhibition commission, which operates the exhibition grounds in Bible Hill, is unable to continue its operations and has asked Colchester County council to consider taking over.
TRURO - The Nova Scotia Provincial Exhibition (NSPE) Commission is in such dire financial straits it cannot pay its bills and is no longer a "viable" operation, according to a financial review.
"The Commission is not viable in its current form and it is insolvent," a financial review conducted by Grant Thornton on behalf of Colchester County reads.
The information was made public during Thursday night's council meeting.
"Given the poor operating results, and the Commission's precarious financial position, the status quo cannot continue," the report states, in its conclusions and recommendations.
The report goes on to say that the commission, which is $1.1 million in debt, "does not have sufficient capital to continue operations without incurring debt for which it has no prospect of repaying."
The review has prompted the commission to formally seek financial assistance from the municipality.
A letter to council from commission vice-chairman Steve Karrel confirms the situation is such that the board is "... unable to continue the operation of NSPE and humbly ask that council consider taking over the operation of NSPE in its entirety."
Karrel's letter states that the NSPE "is struggling to stay in operation and is trying to carry through with its obligations with clients who have booked venue time" and that it is also working with the Truro Harness Horse Owners' Association to keep the raceway in operation.
However, the financial review indicates that liabilities of $709,521 (as of June 30) are due within the next 12 months, not including any current portion of long-term debt due within the next year. Of that amount, $637,519 represents accruals and amounts owing to suppliers, utilities and several government organizations.
A total of $412,000 is owed to the Nova Scotia Farm Loan Board while another $211,000 is owed to various racetracks in North America for simulcast betting.
Current payables of $106,063, incurred within the past month relating primarily to racetrack activities, are owed, while another $86,000 is shown as a purse pool liability.
As well, the commission's property taxes have not been paid since 2008 and now stand at $56,000.
"Generally, there are no payments being made to creditors where the accounts are over 30 days old," the report says.
"The Commission's financial position has continued to deteriorate," it states, adding that since 2010, the NSPE's equity has reduced from $588,000 to $270,000 "as a result of operating losses during this time."
The recently held Atlantic Grand Circuit Week was estimated to lose $70,000, and between July 28 and the week of Aug. 25,the commission is expected to be in a negative cash position of about $30,000.
Between Sept. 8 and Dec. 28, when no live racing is being held, the commission is expected to consume an additional $62,000 in normal operations.
"This projection shows that the Commission will require $51,000 in funding to cover its ongoing costs to December 31," the report says. And that is without the expectation of any payments being made to the Farm Loan Board.
The report said the commission lost $147,000 in 2012. By comparison, for the first six months of this year, however, losses were pegged at $24,000.
That decline in loss was attributed in part to the fact that the raceway showed a profit of $26,000 because live racing did not occur between Jan. 1 and June 30, as in previous years.
Weekly losses of approximately $8,000 are attributed to live racing.
Since November of last year when a new manager was hired at the facility, "overall expenses have been reduced by 11 per cent and renewed efforts are being made to attract new revenue sources," the report says.
"In discussions with management," the review says, "we sense a high level of frustration with respect to directions being given to management from the Board which may later be varied by individual board members, putting management in a difficult position of deciding whose instructions they should follow."
From a recommendation standpoint, the report suggests that the county or other government departments/agencies could advance funds to retire the commission's debts or that the NSPE could sell some of its real estate and put those proceeds against its debt. Capital assets are estimated at about $1.2 million.
Should the county decide to provide the commission with funding, however, the report advices that it obtain security for such advances.
The review also suggested the commission could reduce its debt obligations by filing a formal or informal proposal with its creditors or give consideration to selling or leasing the racetrack to one of its horse owner's associations.
"If no action is taken by the Commission to deal with the debt," the report says, then creditors may commence recovery proceedings and this could lead to a forfeiture of assets. In a worst-case scenario, the Commission could declare bankruptcy and cease operations."
Council has called a special public meeting for Tuesday evening to further discuss the situation.