Too big to fail?

Wednesday February 17, 2010

By John Thompson

Courtesy of Great River Journey

Page3
Great River Journey says it needs a cash infusion of $1.2 million to get through 2010.

Great River Journey wants a government bailout.

The fledgling tour company, which hopes to persuade rich boomers to part with $6,500 for a week-long tour down the Yukon River, finds itself teetering towards bankruptcy.

The company needs a cash infusion of $1.2 million to get through 2010, said president George Asquith. He hopes the territorial and federal governments will each pony up $400,000, with the remainder coming from the company’s First Nation and private owners.

And he needs money soon. Now’s the peak period to run advertisements to woo potential customers.

Asquith fears the company may close if it doesn’t receive money by month’s end.

Great River Journey finds itself short of cash after a disappointing past summer, during its first full operating season. It counted on selling 300 seats. It sold 100 instead.

This lacklustre performance was an unavoidable consequence of the global economic downturn, said Asquith.

Of course, when most companies run short of money they can’t count on government to ride to the rescue, unless they’re a General Motors or an Air Canada—firms deemed to be “too big to fail.”

It’s hard to see Great River Journey, a company that employed a peak of 35 workers last summer, fitting this description.

About $12 million has been invested in the company to date.

Of that, about $5 million comes from private investors and $4 million in grants and loans from government, including $500,000 in grants from the territory.

The Kwanlin Dun, Ta’an Kwach’an, Tr’ondek Hwech’in and Selkirk First Nations each pitched in $250,000 of their own money. This First Nation involvement helped leverage an additional $1.5 million from Ottawa.

To pull the plug on the project now would be a big waste, said Asquith. Only a fraction of the invested money would be recoverable, he said.

But the company won’t receive any more money from Yukon’s Department of Economic Development, which has already doled out $630,000 to Great River Journey since 2007. Departmental guidelines forbid it from giving more money, said assistant deputy minister Terry Hayden. He suggested they talk to an investment bank.

But private money has not been easy to find, said Asquith. So he’s taking his case to the Yukon cabinet.

He sent a letter on February 8 that warns, “Failure will have tragic and unnecessary consequences.” He hasn’t received a response.

As Asquith tells it, he’s the one doing government a favour. His business would attract a demographic largely missed by Yukon’s tourism industry: affluent boomers with no interest in paddling a canoe or lifting a backpack, but who are willing to drop big dollars for a chance to commune in comfort with the northern wilderness.

“It’s something the Yukon needs to do,” said Asquith. “This is the time for the local government to step up and support an important icon project.

“The territorial government needs to be the leader. Everyone else will follow.”

But Premier Dennis Fentie and his cabinet are bound to wonder why, if this company is such a sure bet, it cannot raise the money privately.

They may also wonder when they became partners in the venture, as Asquith identifies government as among his company’s “principals,” in his letter.

One impediment to Great River Journey drawing private investment is its significant debt load. It’s also asking for government help in shedding it.

It wants Ottawa to forgive a $712,000 loan and the Business Development Bank of Canada to write down much of a $2.8 million loan.

Further debt would be shed by converting investor’s loans into shares. But First Nation investors have so far balked at this plan, because the addition of new investors could lead to “massive dilution for existing shareholders,” states the company’s 2010 business plan.

But if First Nations fear being soaked, and believe the company can succeed in the long-term, why don’t they contribute the needed cash themselves?

That, said Asquith, is a question for First Nations. And Steve Taylor, who leads the consortium of First Nation investors, could not be reached before press-time.

Asquith is a lawyer by trade who dove into the tourism business to help a friend launch a successful submarine tour company in the Cayman Islands. He grew up in Toronto, but is a long-time Whitehorse resident.

For about $1,000 per day, guests spend five to seven days being ferried down the river from Whitehorse to Dawson City in small motorboats that are enclosed with Plexiglas to ward off wind and rain.

After being regaled with goldrush lore and First Nation history, guests nosh on fine local foods such as caribou steaks, then retire to plush cabins replete with flush toilets and claw-foot bathtubs.

The business cannot be simply mothballed, said Asquith. It spent the past year ferrying around 50 travel writers and travel agents, working up praise in magazines such as Forbes and National Geographic. But shuttering for a year could be fatal, for agencies would worry about the business’s reliability.

“It’s not the time to blink,” he said.

Contact John Thompson at

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Bookmark and Share 28 Comments

10:15am 02/27/10  |  Yukon Cornelius wrote:

Well I guess that clears it up, we’ve asked asdfgh1 for facts and he/she has not said a word.

GRJ jas provided no justification for further welfare payments.

3:59am 02/24/10  |  Kimmie wrote:

Don’t blame the “economic downturn”. The travel industry couldn’t sell your product. The rich are still going on holidays. Some of them spend over $50K to rent a yacht for 10 people for a week, $7K on tips for staff.
You said:“only trying to kill a good company” No one is trying to kill your company; it is already essentially dead. The next logical step is to turn off the life support. You have a huge emotional investment, you want it to work, but it can’t. I am sorry for you.

7:55pm 02/22/10  |  Steve O wrote:

If this sort of venture is going to replace mining as an industry good luck. Lets face it some government insiders and hangers-on probably got this pathetic failure going in the first place. Trumped up feasibility and a dash of wink wink nudge nudge got this baby off the ground. There could be kickbacks involved also. I believe Yukon to be one of the most corrupt regions in Canada. Government high rollers and scam artists will probably milk this farce for all it’s worth.

5:47am 02/22/10  |  bobvibert wrote:

When you (the government + public money) bail out any private tourism enterprise, a very dangerous prescident is established. If you do for one, then you got to do for all. I am sure there are alot others in the same shoes and facing similiar challenges? Look at all the Alaska Hwy Lodges closed during the past few years. Why bail them out? They all had some very ‘good’ years in the past decade or two. They should have saved their resources as well to carry them over the rough times?

10:10pm 02/20/10  |  Yukon Cornelius wrote:

asdfgh1

Why would we be jealous of a business that’s asking for a handout. I mean we’re all just monkey’s or woodcutters etc.

Let’s get back to the facts.

1. If you have such a good plan, why not approach your first round investors or BDC ?
2. Why should the public bail out your company and not other businesses
3. How many people does GRJ employ year round ?
4. How much of this money would go to pay existing bad debt ?
5. Please clarify which facts are in error in this article

9:08pm 02/20/10  |  Yukon Cornelius wrote:

You seem to be a representative of the company, that you are here anonymously name calling (jealous, monkey, woodcutter (which is apparently and insult)) instead of saying my name is ____, and presenting us with valid reasons to support your request, suggest there may still a certain lack of professionalism within the company.

8:17pm 02/20/10  |  EricB wrote:

asdfgh1 - almost forgot - Thank you - my weekend is great and I never sweat it.

8:11pm 02/20/10  |  EricB wrote:

asdfgh1
Your finally sort of getting it!! I do not Hate the plan nor do I Hate entrepreneurs. What I do dislike are people who have the attitude that they are entitled and all of their problems are someone elses fault and none of it could possibly be theirs. Anyone who is going to the government or a bank or investors with that attitude will be quickly shown the door!
I admit that I enjoyed your reactions names and comments you make. It’s like poking a bear with a stick to get a reaction..

3:16pm 02/20/10  |  asdfgh1 wrote:

ok,ok. i get it, you hate the idea and your jealous. why hate entrepreneurs? do you believe everything after reading the yukon news? well i hope you both have a good weekend and don’t sweat it so much.

5:26pm 02/19/10  |  EricB wrote:

Yukon Cornelius
You just asked asdfgh1 to “return to logical discourse” if he can. Why should he as they just spent $500k on research and planning. Even though the research may have been flawed and planning lacking - $500k!!! Surely the amount gives him the right to anonymously call any one he wants names.  $500k - WOW!!

5:08pm 02/19/10  |  EricB wrote:

asdfgh1 - $500k on research and planning - Wow!!!! I’m really impressed that it took that much to figure out that the plan was questionable and the timing was bad.  Hey it can’t be my fault - just look at all of the other people who got caught with their pants down?? Must be the governments fault so lets get them to pay.  Sounds good to me!
And if Simian is to big a word for you I can use simpler ones if you really want.

4:42pm 02/19/10  |  Yukon Cornelius wrote:

asdfgh1

You continue to anonymously hurl baseless and pointless insults like a child. Let’s return to logical discourse if you can.

Explain what the benefit to the Yukon tax payer of investing in this business ?

3:59pm 02/19/10  |  asdfgh1 wrote:

Yukon Cornelius: Obviously you know nothing about business, and you own a business you say? Let me guess, you cut wood? You make $15k a year? After you learn something about business we can talk. Business Plans that so a profit in year one are junk. I believe this company has spent $500k on market research and planning. The economic downturn caught everybody with there pants down. Are you suggested the company should have foreseen this? or foreseen dealing with you ripping them off?

3:55pm 02/19/10  |  asdfgh1 wrote:

EricB: I think you really need to get your facts straight! There are 3 boats and why would I provide information? I simply read an article and look for reliable information, then I made my opinion. At no point would I start offering my opinion, like yourself without the FACTS. Instead of having your opinion based on others, you should come up with your own. Simians is a big word for you!

1:33pm 02/19/10  |  EricB wrote:

Monkey?? - from the one who does not sign his name??
Oh I know.. asdfgh1 must be referring to the study where 50 simians were put in a room with computers and after what anthropologists thought was just the random punching of keys for 1/2 an hour it was discovered that they had come up with a better business plan than asdfgh1!! Oh yah the government did not have to throw away 1.2 million for this study either!

12:45pm 02/19/10  |  Yukon Cornelius wrote:

So how’s that business plan working out for you ? (the one where you make money for the third year)

Are the people who made that plan making the plan to use the 1.2 million, or did you get someone new ?

12:20pm 02/19/10  |  EricB wrote:

asdfgh1 - All GRJ literature, publications and material submitted through the media only indicate a maximum capacity of 300 at a stretch. If you have the capacity to double that number then maybe you should have let people know! As everything stands now GRJ has indicated they have 1 boat times 10 people times 24 weeks (stretch) = 240 seat capacity.

12:16pm 02/19/10  |  asdfgh1 wrote:

Hey monkey-it’s me again.
1. Math for you, because you obv. can’t add! 20wks of operating at 30 people a week = ?????
2. Business Plan did not call for breaking even until at least the 3rd year, so I don’t know what you are talking about
3. $1.2MM is not what they are asking for-maybe get some facts

11:43am 02/19/10  |  EricB wrote:

Hey asdfgh1 - its me again with scam #2 tourism business scam!!
1) who in their right mind would assume 100% seats filled for 2 months more than you are actually open for reservations.
2) who in their right mind would assume they would make money in the tourism industry the first year they operate??
3) What kind of a sane person would start out asking for 1.2 million dollars from the governments by saying well look at how much you gave GM.

11:41am 02/19/10  |  asdfgh1 wrote:

EricB: You make no sense. Full capacity is 600!

11:14am 02/19/10  |  EricB wrote:

Hey asdfgh1 - scam #1 (math scam!!)
Simple Math - GRJ says they need 1.2mil more to equal 300 customers in 2009.
GRJ only capable of handling 240 customers at full capacity in 2009.
GBJ already had a built in loss of 60 customers or $390000 for 2009.
This is all assuming that GRJ operates 6 months not 4 and fills 100% seats every trip??

10:31am 02/19/10  |  asdfgh1 wrote:

Slander!!! Yukon Cornelius please give your name of your company. Great River Journey has done nothing but inject cash, including jobs into this economy and has great relations with its partners.
People are free to comment as we live in a free society, but losers like you who make comments without any facts, are only trying to kill a good company for your own personal benefit. Maybe try thinking of someone other thatn yourself, you small minded tree hugger!

10:07am 02/19/10  |  Yukon Cornelius wrote:

A strange comment from someone slandering all the other users here while using the name asdfgh1

9:34pm 02/18/10  |  asdfgh1 wrote:

Christopher: Do you know anything about tourism? math? You must rent canoes.
bobvibert: Do you know anything? spelling? Go figure. Oh yeah, why is it at your expense? You did a job to say that.
Yukon Cornelius: Your company sucks, way to rip people off. I wouldn’t talk if you can’t back it up with your NAME.   

7:45pm 02/18/10  |  EricB wrote:

Obviously GRJ did some verry verrry bad financial planning.  Anyone who puts all of their eggs in one basket (over inflated basket) is crazy.  The simple math shows max 240 persons first year not 300.  1 trip/wk times 10 people/trip times 24 week season is 240 people.  Simple math - NO.  Get lost - no more $$$$.

8:25am 02/18/10  |  Christoph wrote:

Great River Journey already received unprecedented promotional and financial support from all levels of government over the last few years. 60% of their $11 Mio. investment so far is taxpayer’s money, which Mr. Asquith is asking not having to pay back!!  Additional tax dollars (the company asks for $1.2 Mio) would be an unjustified waste and would only extend the companies suffering. It is now time that Great River Journeys opens their eyes and faces the realities.

5:28am 02/18/10  |  bobvibert wrote:

Here we go again. Another Big Boy Bailout at OUR Expense. What are we (the average Yukoner) getting out of it? Not jobs. These places all hire their ‘favourites’ from the States or foreign shores. I wonder where they will hide or transfer their assetts if a bankruptsy does happen? Certainly in a place where it will benefit the owners? Go figure.

10:11pm 02/17/10  |  Yukon Cornelius wrote:

Take Heed, this project has been badly managed since it was half built. Staff and contractors have fled this project since it began (ask around town). No bailouts without serious professional management with experience in this category of business.

(our company formerly provided products for them)

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