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The Real Reason for Catalyst Financial Problems |
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As a resident of Powell River, Nelle Maxey is very familiar with
Catalyst's approach to dealing with their worsening financial
position. Unfortunately, the Powell River Mayor and Council
granted them a five-year $3million tax reduction in December of 2002.
As a researcher, she recently looked into Catalyst's financial history
and discovered the real reason for their financial problems. Namely, in
2001 Norske took $1.5 billion in cash and paid it out to their
shareholders—the "largest payout of it's kind in Canada", boasts CEO
Russell Horner in the 2001 Norske Annual Report. They then borrowed
$1.2 billion throwing the company into a debt from which they have
little hope of ever recovering especially in the business environment
of rising interest rates they find themselves in today.
This was a business decision the company choose to make in 2001.
Imagine how much it costs each year to service almost $900 Million in
debt. If they were not servicing this debt they would be not be running
in the red and begging for tax cuts.
Here are a few pages from a public presentation which Maxey recently
worked on for the Powell River Chapter of the Council of Canadians
which outlines this $1.5 billion payout to shareholders. All of the
information contained therein is from Norske documents, market analyst
websites and quotes from our local paper, the Powell River Peak.
Of course corporations are required by law to meet the needs of their
shareholders, not those of the community in which their businesses
reside. City governments have a different mandate.
The Real Reason for Catalyst Financial Woes
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