The National Trade Corridor Fund grant application is a two step process:
1. The ‘expression of interest’ where we describe our project to demonstrate that it meets the criteria of the NTCF
2. The submission of a ‘comprehensive business plan’
Both of these steps are to be completed on a prescribed computer input data form with very limited space to provide customized data. We have attempted to submit our expression of interest but without success, but the NTCF has advised us to communicate directly with them as we see fit.
The issue is that our grant application is for only the first phase of a huge project – a new port at Jervis Inlet, to replace a large portion of the port of Vancouver. The first phase is to establish feasibility at what the engineers call a Class D level of certainty, meaning a cost estimate that will be assured to only a plus or minus 50%. That is, if the engineers confirm our $10 billion estimate, that confirmation could mean that the final cost could be as low as $5 billion or as high as $15 billion. However, they will have also opined feasibility and environmental impact and identified areas of concern. For the first time we will have a professional evaluation of feasibility, cost, and environmental impact. If the Class D report is negative that will be the end our huge Pacific Gateway solution and relatively modest funds will have been spent.
Also, for the first time, the project will have the credibility to deserve the serious attention of Government and major corporations in the international transportation industry – the major potential stakeholders at the proposed port, the largest on Canada’s Pacific coast. But we will not have a completed project, only phase 1.
At that point we will have to have acquired serious commitment of interest of several levels of government – federal, provincial and municipal – and a good portion of the stakeholders. This is true because the next phase is to move to Class C study, a more advanced level of study that will provide increased level of feasibility and accuracy regarding the cost estimate – at a 35% level. Our current budget for this study is $300 million and there is no expectation of additional NTCF funding. For Jervis Ports Inc. to continue it will have to raise that $300 million by issuing additional shares.
The issued shares before that time will have been the founder shares and a planned funding for additional seed monies currently estimated as below:
|64,000 Class B voting shares at $0.10||$6,400|
|Additional seed funding, probably at $1.00|
|64,000 Class B voting shares (note below)|
|- 32,000 issued to First Nations||32,000|
|- 32,000 issued to industry stakeholders||32,000|
|- 186,000 Class A non-voting shares||186,000|
Note that at that time the voting shares would be owned 50% by the founding shareholders, 25% by first nations and 25% by industry stakeholders. Non-voting shares will also be issued to preserve neutral voting control between the founders and others. The non-voting shares will be converted to voting shares after a successful funding for the next issue, which will fund the Class C studies. IT IS IMPORTANT TO NOTE THAT THE $250,000 OF ADDITIONAL SEED FUNDING HAS NOT YET BEEN REALIZED. IT IS ONLY A PLAN, BUT IT WILL HAVE TO BE PUT IN PLACE PRIOR TO THE RECEIPT OF ANY GRANT FUNDING.
We will also have received the Class D engineering and environmental reports. The vast majority of the effort to date has been executed by the Board members and other volunteers of Jervis Ports Inc. and its predecessor organization, the Third Crossing Society.
In any case it would now be the time for significant private sector participation – the estimated funding of $300 million for the Class C studies, which are expected to take three years to complete. Additionally, Jervis ports Inc. will require operating monies for the three years. We currently have estimated $10 million for the three year period.
The probability of successfully funding these studies is high. There is a large pool of very large potential stakeholders. If First Nations wish to maintain a 25% ownership in the Port their subscription will be $77.5 million and the stakeholders subscriptions would total $232.5. If there were ten to twenty stakeholders their subscriptions would be from $11.625 million to $23.25 million each, an acceptable amount, given the financial capacities of these organizations. If there is a shortfall for this funding, some shares could be offered to Canada’s governments.
Pricing these $310 million of shares will be a serious business. The shares should be priced as high as possible to minimize overall dilution. Additional issues will be required to fund Class B studies (Current estimate $400 million), Class A studies (Current estimate $200 million) and construction costs, overheads and early operating years. It is almost a certainty that a public offering of shares will take place at some time in the future.
Additionally, a debt offering can be expected. For that debt offering to be successful, there have to be a high level of confidence that operations will be able to service the debt. These levels of confidence will have to be re-establish at the beginning of every phase of study, construction and operations including the very first phase, the application.
Our expression of interest and our comprehensive business proposal must provide comfort to NTCF that all these things have been carefully and competently considered if we are to receive a positive reply to our application.
We believe that this website and the formal Expression of Interest should give that comfort to the NTCF at this time. There is much to be done, particularly during the development of the Comprehensive Business Proposal, to advance that comfort level. It will require significant demonstrated co-operation and information sharing with numerous stakeholders before the time of NTCF making a positive response to our NTCF grant application.