Monday, March 25, 2013

Torstar's 20% of Black Press valued at zero

David Schreck of Strategic Thoughts provides worthwhile analysis of David Black's Kitimat Clean proposal. If you think the refinery proposal is anything more than politically convenient fantasy aimed at boosting BC Liberal prospects, read David's Refinery Credibility: BC vs. AB. Here is an extract:
"Compare the numbers behind Alberta's NWR [a refinery planned near Edmonton], where $1 billion has already been spent on the project and environmental permits have been obtained, with Black's Kitimat Clean where a few news events have been staged.

"With NWR, after working since 2004, at a cost of $5.6 billion, 50,000 barrels a day will be processed by 2016. Black claims his refinery will cost $13 billion and process 550,000 barrels a day. Capital cost per barrel/day for NWR is $112,000; Black claims he can do the job for just $23,600.

"Something is wildly out of whack! It is true that labour costs are higher in Alberta and transportation costs to get machinery to Edmonton are higher, but that isn't enough to account for a five-fold difference in costs.

"No wonder Navigant's report is so qualified that it basically says don't believe what you read here."
Star investigator Bob Mackin reminded us of an article he wrote for The Tyee in August 2012. David Black Confirms BC Media Love a Tycoon with a Dream reflects Bob's skeptical view of the Kitimat refinery and he also relates details of another mega-project that, despite its fantastical proportions, excited Vancouver media. That is another story from the past worth remembering.

Kitimat refinery plans blown-up
People relying on Postmedia newspapers, or on Black Press publications, will be missing significant details about the Kitimat refinery proposal. It is the alternative media that provides missing information. Northern Insight reported on unusual qualifications and reservations Navigant placed on its consultants report, one that should have been paid for by Black and the BC Liberals. David Schreck scrutinized the refinery's financial elements and Mackin's 7-month old review adds questions about David Black's ability to proceed, if that is actually what he wants to do. Mackin's Tyee article notes this about Black:
"He is, however, downplaying the June rating downgrade by Standard and Poor's of Black Press from stable to negative, in part, for "less than adequate liquidity" and the "ongoing headwinds" it faces amid revenue and profitability declines."
As a private company, Black Press does not report financial data to the public but information can be determined through other sources. Torstar, parent company of the Toronto Star newspaper and other media properties, shows in its 2012 Financial Statements a 19.4% equity investment in Black Press. It states that Torstar has not been recording any share of the associated company's results because the carrying value in Black Press has previously been reduced to nil.

In 2002, Torstar invested $20 million for one-fifth of Black Press but reduced the investment to a value of zero in 2008. Black publishes more than 150 titles in print and online in North America but is still valued by Torstar at zero in 2012, with about $10 million of losses remaining unrecognized.

I don't know much about David Black's finances but it appears that his "I'm not a billionaire" statement is not false modesty. That's information not provided you by the Liberal friendly corporate press. Anyone suppose Christy Clark's one, two, three, four, five LNG plants have prospects similar to Bllack's Kitimat Clean bitumen refinery?

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  1. Though Torstar's report also says its share of Black Press net income in the most recent fiscal year would have been $3.9 million, indicating the company made about $19.5 million. Not a return that would thrill corporate analysts, but tidy for a largely private company.

    1. And the five year record? Not very tidy for any company nor the base for entry to a costly, highly technical industry unrelated to previous activities.

    2. The five-year record isn't bad in terms of acquiring what the company hopes are undervalued assets during a recession and making a somewhat contrarian bet on newspapers.
      But no argument on the lack of experience/expertise on the refinery proposal or the lack of any industry partners.

    3. Extrapolating the Torstar Annual Report information indicates a five year cumulative loss of $82 million (2008-2012) after major write off in 2008. Profits for last three years average $12 million annually.

      It was only June 6, 2012 that Standard & Poors reported,

      " -- We are revising our outlook on Victoria, B.C.-based Black Press Ltd.
      to negative from stable based on our view of the ongoing headwinds the company
      faces with revenue and profitability declines given difficult industry
      fundamentals, as well as refinancing risk.

      " -- We are affirming all our ratings on the company, including our 'B'
      long-term corporate credit rating.

      " -- The negative outlook reflects Standard & Poor's view of Black Press'
      challenges, including our expectation of weak operating performance and
      refinancing risk."

  2. Well David if you don't dream nothing will happen. Unfortunately this isn't a dream of Blacks, it's one made up from the LIbERalS brain trust. Well I use "brain" LIbERally here. Obviously it's nightmare trying to be foisted on the people of BC hoping they will bite and re-elect the most corrupt government in the World, and I don't use "World" LIbERally here.



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