Babcock & Brown, the parent company of the group contracted to build and operate nineteen Alberta Schools, has declared its stock worthless.
The company shares tumbled after the corporation racked up $3.1 billion in debt. Now Babcock & Brown, which laid off a quarter of its employees in August, is attempting to negotiate a restructuring plan with its bankers.
CUPE Alberta President D’Arcy Lanovaz is calling on Education Minister Dave Hancock to explain why the government is using a bankrupt company to build much needed schools.
“It’s been known for a long time that Babcock & Brown are in serious trouble,” said Lanovaz. “Alberta desperately needs these new schools – my fear is that construction will be severely delayed.”
Lanovaz said the government would have been better off building schools by traditional methods, but they were intent on using a public private partnership to keep debt off the books.
“If we used traditional methods, the worldwide financial crisis wouldn’t be impacting the building of these schools,” said Lanovaz. “Furthermore, the costs would be lower and the public would have more control over the operation of these buildings. The only advantage to the government is that the company officially holds the debt instead of the taxpayers.”
Lanovaz was dismissive of government claims that Babcock & Brown’s financial troubles won’t impact the school construction.
“Babcock & Brown owns a major share of the company in contract with the Alberta government,” said Lanovaz. “The Conservatives are misleading Albertans by trying to pretend everything is alright.”