'Tolerable risk' in giving $34M bailout loan to Discovery Air: Miltenberger

The Northwest Territories government decided to give a $34-million loan to Discovery Air after an independent review deemed the loan presented a "tolerable risk," says Finance Minister Michael Miltenberger.

Questions linger about the loan, which comes from the N.W.T. Opportunities Fund. Terms are expected to be finalized this week, although the company had until Feb. 1 to refinance its existing debt.

Miltenberger, who also chairs the government's Financial Management Board, acknowledged that the bailout loan marks a change for what is usually a low-risk fund.

"What triggered the switch from the passive to being active was those economic circumstances and an unsolicited proposal that got us around the table to say, 'We have to look at this, because this is a big outfit, has lots of northern content, hundreds and hundreds of jobs,'" he told CBC News in an interview.

Independent review

Discovery Air, the parent company of Yellowknife-based aviation firms Great Slave Helicopters and Air Tindi and several other operations within Canada, announced on Jan. 19 that it received the Opportunites Fund loan.

Miltenberger said Discovery Air's proposal for financial assistance was independently reviewed — at Discovery Air's expense, for about $50,000 — and that review's conclusion came in favour of making the loan.

"There was risk, but it was tolerable risk, given the economic circumstances, the value added, and when you look at what would happen, God forbid, if an outfit that big would have ended up going under, packing its bags, leaving the North, whatever," he said.

The final decision to grant Discovery Air the Opportunities Fund loan came on Jan. 14 from cabinet and the Financial Management Board, government officials say.

"My job is to deliver upon the Financial Management Board and cabinet's direction," said N.W.T. Deputy Industry Minister Peter Vician, who chairs the society that administers the Opportunities Fund.

Politically motivated decision, MLA charges

Yellowknife Kam Lake MLA Dave Ramsay said no details about the loan were given to the MLAs' economic development committee, which he chairs.

"There has been no evidence that it wasn't just a politically motivated decision to lend the money," Ramsay said.

"I haven't seen any evidence. Nothing. Zero."

Miltenberger acknowledged that one cabinet minister is a Discovery Air shareholder and declared a conflict of interest throughout the loan decision process, but that's where the conflicts end.

"This type of thing, the friendship stops at the door," he said.

"This is business. This is government making investments, making decisions, trying to provide leadership in difficult times.

Non-cabinet MLAs are expected to bring up the Discovery Air loan when the legislative assembly reconvenes later this week.