Province Paying Out Sysco Credit Lines

The history of funding Sydney Steel Corp.'s operations through credit will end today with the expiry of the Crown corporation's various lines of credit.

The Nova Scotia government is paying out $154.3 million to cover lines of credit and performance guarantees that were established between 1995 and 1999, Gordon Balser, Minister responsible for Sysco, said today.

About $79.1 million is owed to the Royal Bank, while about $75.2 million is owed to the Bank of Nova Scotia. These amounts will not impact on the province's deficit for 1999-2000 as the expense was accounted for in previous years.

"This is in keeping with our commitment to end the day-to-day funding of Sysco's operations through taxpayer-funded lines of credit," said the minister. "These credit lines were set to expire and be called in by the banks today, so we have moved to pay them proactively."

The minister noted that Sysco's cash flow is currently in a positive position, which is projected to continue for the next period of time.

"Ernst & Young has improved Sysco's cash flow situation, so we have not had to rely on the line of credit."

Ernst & Young are currently managing the plant and are working to sell Sysco either as an existing business or through a sale of assets.

"Nova Scotians are getting out of the steel business," said the minister. "And our clear preference is to see the plant sold as a going concern."