oop's my bad, Defendant 005 sam Earl st. amour's (St.Nomour)


December 2001 Winnipeg EXCEPTS Defendant 005 sam Earl st.amour's (St.Nomour) "Huge "Package".

Then Defendant 005 sam Earl st.amour (St.Nomour) PREMATURELY PULLS OUT his Huge Package.



VOTE for Tory labour critic Ron SCHULER!

He would not comment on his thoughts about Fruitland Township Supervisor 2008-2012


Vol. IV No. 6  1:30 p.m., First SessionThirty-Eighth Legislature


Mr. Jack Penner (Emerson):

"Foot being held to the FIRE"  Hon Mary Ann Mihychuk (Minister of Indus-try, Trade and Mines):


So the millions of dollars in subsidy provided by your Government and the 1300 layoffs just announced in August of 2003, I believe the entire amount of the subsidy provided by the taxpayers to MCI was $20.5 million.

  •     Orchestrated by Fruitland Township Supervisor 2008-2012. Nice Job! Earl St.Nomour. Experience.

Before we discuss this issue, I would like to ask the minister if she could tell this committee whether she has been part of an interdepart-mental committee to discuss a cash advance program to the cattle producers and their fami-lies and also ask her if she would see it as reasonable to provide a similar sized incentive to assist over 12 000 producers currently in crisis.

  •     Farmers losing their Homesteads and life savings due to "mad cow disease", So little or NO assistance for Hard Working Farmers! Nice...Earl ST.Nomour @ AAh Bouy.


Mr. Chairperson in the Chair

Ms. Mihychuk: Honest documents on the Motor Coach deal, $9.4-million loan. The total package, including the federal government, the City of Winnipeg and our training program, was $20 million. But the MIOP program was only $9.4 million.

SCHULER, Ron       Springfield P.C.


Mr. Schuler: My question to the minister is: When did she first get involved with the whole MCI file? When was she first approached by Motor Coach Industries (MCI) in regard to´┐Żand I am having difficulty seeing the minister. When was she first made aware that MCI was looking for a loan?

Ms. Mihychuk: Motor Coach Industries (MCI) approached government, and I became aware of the situation and their need for assistance, in November 2001. The conclusion of our negoti-ations and the announcement of the assistance package was May 2002.

Mr. Schuler: Was the minister approached directly by the company, by Motor Coach Industries (MCI), and who approached the Govern-ment?

Ms. Mihychuk: The local Motor Coach plant management approached the Financial Services and senior management of the Department of Industry, Trade and Mines. They did not ap-proach me directly.

Mr. Schuler: It sounds like it was a low-level discussion to begin with. At what point in time did it get to the minister's desk, that MCI was looking at getting some kind of a package or they were planning on leaving?

Ms. Mihychuk: The management from Motor Coach here in Winnipeg realized that the head office was looking at efficiencies, and poten-tially looking at other locations for the manu-facturing of their units. At that time they approached government with the situation and asked if there was some assistance that could be provided. Within two to three weeks, the ministers involved, myself, were notified of the situation and from there we moved through the process of consultation and the development of the agreement.

Mr. Schuler: Was that Mr. St. Amour? Was he the individual who contacted the Government?

Ms. Mihychuk: No, it was not. Mr. St. Amour was the local plant manager.

Mr. Schuler: Who might that have been?

Ms. Mihychuk: Mr. Rob Perry.

Mr. Schuler: The message that Mr. Perry carried to the Government was that head office was looking at potentially moving Motor Coach Industries to another location. Was that done verbally or in writing?

Ms. Mihychuk: The initial discussions were verbal. The management came in and met with staff from the department to review the situation, indicate that they were in competition with other sites in the Motor Coach family and potentially even greenfield sites. They would have to put together a package that would be the most favourable to the company which was looking at some fairly significant changes and asked if gov-ernment would be prepared to assist. From there, you go on to putting things down onto paper, reviewing their financial statements, working with management to see what government can do.

Mr. Schuler: When was the minister first notified that these meetings were taking place?

Ms. Mihychuk: As I say, it was approximately two weeks after the initial meeting, in November of 2001.

Mr. Schuler: When did the minister have her first meeting with Mr. St. Amour, slowly moving up the food chain at MCI?

Ms. Mihychuk: I was not directly involved in the negotiations. Normally these negotiations occur by staff with regular briefings at the ministerial level. I did not meet with the president or anyone else. Most of the negotiations occur by staff with regular briefings at the ministerial level. Most of the negotiations, like I say, went on with the technical and financial managers that we have in government with the people in the company. So the negotiations are conducted by those who know those affairs best. My participation was to take it through the process of government, but I was not directly involved in negotiations.

Mr. Schuler: Okay, then, can I ask when was the department engaged with Mr. St. Amour? When did they start having discussions with him rather than just the plant manager?

Ms. Mihychuk: The earliest that the staff here met with other senior managers of MCI was December 2001.

Mr. Schuler: Just so that I have it clear, the first time departmental staff met with either Mr. St. Amour or Mr. Sorrells was December 2001?

Ms. Mihychuk: Staff from the Manitoba gov-ernment did not meet with Mr. Sorrells or Mr. St. Amour at that time. They met with a VP from Motor Coach.

Mr. Schuler: Is Mr. St. Amour not the vice-president? Who was the vice-president that they met with?

Ms. Mihychuk: Motor Coach Industries has a number of vice-presidents. Mr. St. Amour is the VP of manufacturing. Initially, we were dealing with or we dealt with the VP of human resources.

Mr. Schuler: What would that gentleman's name be?

Ms. Mihychuk: We will have to get back with that information tomorrow.

Mr. Schuler: So the department had negoti-ations with the human resources vice-president, and we have trouble remembering his name? [interjection] Okay. Can I ask the minister what other depart-ments were involved at this point in time with the negotiations? Was it just her department or were there other departments involved as well?

Ms. Mihychuk: To clarify the record, I believe the question was: When and who in the senior level did you meet with? So we did indicate that did not mean that detailed negotiations went on with that individual. Secondly, the negotiations were conducted by our department, Industry, Trade and Mines.

Mr. Schuler: Just to the minister, periodically I get a door slamming behind me and I missed a little bit of what you were saying. Negotiations were with her department and her department alone, and it was initially or all the way through with the human resources vice-president? [inter-jection] Then I did not get it right.

Ms. Mihychuk: We met with the VP of human resources initially, but the primary negotiator was not that individual.

Mr. Schuler: So who was the primary negotiator that government dealt with from MCI?

Ms. Mihychuk: Mr. Chairperson, the process of the negotiation of the deal went through various stages. There were discussions with the VP of human resources. There was some discussion with the president himself. Then there were discussions with the VP of finance. The final process was primarily with Sam St. Amour.

Mr. Schuler: Can the minister give us the name of the vice-president for human resources and the vice-president for finance? Who are those two individuals?

Ms. Mihychuk: The VP of finance is Al Swanson. We will get back with the name of the VP of human resources.

Mr. Schuler: When Motor Coach Industries approached government, did they come with a complete package? Did that include loans, grants and that the employees would have to take some kind of a renegotiated pay package?

Ms. Mihychuk: When MCI came to govern-ment, their initial situation was discussed, that they were overall in this competitive situation with other branch plants and green fields. They wanted to know what government could offer them, what was the best deal. Usually, that is the situation. When people come to government, they go high. They do not go low. Negotiations go from there. They wanted to know what we could offer. They presented what the costs would be for their project, what they were looking at. They indicated right from the start that they would be asking for greater flexibility from the workers of the plant, and that they wanted some changes to the union agreement.

Mr. Schuler: Can the minister tell this com-mittee with whom is the deal actually signed, what corporate entity?

* (16:40)

Ms. Mihychuk: The agreement is with Motor Coach Industries International, and Motor Coach Industries Limited, Winnipeg branch.

Mr. Schuler: Again I ask, just as a matter of information, when an agreement like that is signed, does the Government ask for some kind of financial statements from the company? What kind of documents are then requested from the company?

Ms. Mihychuk: When negotiations like this occur, we require that companies provide us with their past, present and future business plans and their financial statements. They must open their books and we send in a team to work with those. Eventually this deal was reviewed by Ernst & Young for due diligence to ensure that the company was sound, that the investment was sound and the deal did not have any significant flaws in it.

Mr. Schuler: The team sent in, is that the Ernst & Young team, or is there a different team that the minister is talking about? She said a team was sent in.

Ms. Mihychuk: There are two processes. The department has an internal group that is headed up by Mr. Jim Kilgour. They will review the documents, meet with the company, ensure that all the questions are answered, and then Ernst & Young did a second review.

Mr. Schuler: The minister mentioned that one of the signatories was Motor Coach Winnipeg Limited. Is that correct? Who would have signed for Motor Coach Industries Winnipeg Limited?

Ms. Mihychuk: We will confirm this, but it is our understanding that Winnipeg is a subsidiary, that head office is the same, and so the signatory on the documents is the president, Sorrells.

Mr. Schuler: So Motor Coach Industries Winni-peg Limited is just a division of is it just a trading name, or is it a division thereof?

Ms. Mihychuk: A wholly owned subsidiary.

Mr. Schuler: So Motor Coach Industries Inter-national, I take it then the president is Tom Sorrells. Who are the vice-presidents of Motor Coach Industries International?

Ms. Mihychuk: As I indicated before, two of the VPs are Al Swanson and Sam St. Amour. We will endeavour to find out who the other VPs of Motor Coach are.

Mr. Schuler: So who owns Motor Coach Industries International?

Ms. Mihychuk: Motor Coach Industries at the present time is owned by a New York-based venture capital fund. They are the majority own-ers, headed up by Joseph, Littlejohn & Levy, known as JLL.

Mr. Schuler: So Littlejohn & Levy are the majority owners of Motor Coach Industries International. Who is the other owner?

Ms. Mihychuk: We will have to check to see what the status is right now, but it is our understanding that there are several minority owners, including Dina, the previous owners from Mexico, several banking consortiums, but we will provide greater information to the member tomorrow.

Mr. Schuler: Motor Coach Industries Inter-national, is that then a privately held company or is it traded?

Ms. Mihychuk: Currently, it is private.

Mr. Schuler: Are they regulated by any body in the United States? Do they have to report to somebody because they do have various share-holders or they just have to reply to their share-holders? Is there any governing body above them?

Ms. Mihychuk: As a private company, it is my understanding that they are responsible to their private owners. Other than that, they do not have any official, exceptional reporting structure. There are regulations, of course, in the Depart-ment of Commerce in terms of manufacturing buses, but other than that they are a private company.

Mr. Schuler: Littlejohn & Levy, what is their stake in Motor Coach Industries International? What percentage do they own?

Ms. Mihychuk: We will take that question as notice and review our records and see what we are able to provide the member.

Mr. Schuler: I guess I would be under the assumption that LJL, because the minister said it was a majority shareholder, would then own more than 50 percent. So my question to the minister then would be: How much information does she have on Littlejohn LJL as it is known? Is it a publicly traded company?

Ms. Mihychuk: The first part of the question, yes, they own more than 50 percent. The second part of the question is they are not publicly traded.

Mr. Schuler: Were they ever?

Ms. Mihychuk: No.

Mr. Schuler: LJL, who owns them? Let me phrase my question this way: Is the minister aware who owns LJL and approximately what percentage of LJL they own?

Ms. Mihychuk: LJL is a private capital pool and that information is not available to us.

Mr. Schuler: When due diligence was done, did the department not look at LJL?

Ms. Mihychuk: JLL.

Mr. Schuler: JLL. The minister has corrected me. It must be John Little and Levy then. Make sure we get the acronym right here, for the record. Was JLL not looked at before monies were flowed?

* (16:50)

Mr. Mihychuk: The reputation of JLL is well known amongst investment circles and con-sidered to have a very good reputation. This was also investigated by Ernst & Young indepen-dently and confirmed that status.

Mr. Schuler: Would the minister be prepared to release the Ernst & Young report?

Ms. Mihychuk: I would like to be as open as possible and provide information for the record. I understand the Ernst & Young report is pro-tected by FIPPA, but we will review the situation and see what we can provide which does not breach our agreements in the deal or any confidentiality matters that we have com-mitted to. So we will review it and get back to the member.

Mr. Schuler: Again, I do understand and I com-mend the minister. If only her colleagues would take her example, I think a lot of grief could be spared in this Chamber. She has been open and I appreciate that if there are certain technicalities that cannot be released, clearly we do not want to be compromising individuals or companies. I think the minister knows why there is such concern about this issue. I am sure she has a degree of discomfort, though I doubt she would admit that one publicly. Clearly, there is a problem when government invests $20 million and then the company answers back with, thank you and we are firing everybody. Well, sorry, we are going to keep 20 employees, security guards. I know the Government's concerned about that too. We, as the Opposition, have an obligation to find out what happened and obviously that the public's interest was protected. The minister mentions that JLL has a good reputation. What would the minister base that on? What else does JLL own that would give them this good reputation?

Ms. Mihychuk: The question began with some statements that I am going to have to try and clarify. In the worst-case scenario the company does have the flexibility to virtually lay off everybody in the whole plant. This is not some-thing that management at the plant has indicated is in their plans. In fact, this degree of flexibility will not be utilized, is not perhaps even necessary.The provisions to provide that kind of notice are, I understand, a procedure of labour law. It has caused a great deal of concern for suppliers to Motor Coach, for the families at Motor Coach, I want to reassure them and those that may be reading Hansard, though I have not met many people that do, those that do read the record, that we are working closely with the company and their plans are to continue and make this a viable operation. The worst-case scenario is one that they do not intend to go to, that their plans are to continue to make motor coaches and buses, and that the layoff will indeed, be reversed, and that we will be on a positive track.Twenty employees, I think, is in the worst possible case scenario, and I do not want to cause families more concern than necessary. Again, our indications from the company are that there, unfortunately, will be layoffs. We are working with the company on that. The com-pany will continue to produce coaches, and they will be ramping up again when the market comes back. The question as to the reputation of JLL, the reputation is known within the investment com-munity that its market share is growing, pardon me, that the independent review by Ernst &Young confirmed that this was a legitimate private capital pool that was reputable and had committed to various companies and had a successful record.

Mr. Schuler: I will try one more time with the minister. I would appreciate it if she would give us at least some kind of comfort on this. How big is the capital pool? What else do they manage? If this is all public, common knowledge, then I am sure she is not sharing any state secret here if she lets us know, for all those people that are reading Hansard, and need some comfort that JLL is this growing company. Again, I would ask the minister: How would she know that they are growing in market shares when none of that is public? A $100-million company? Is this a $70-million company? Is this a $2-billion company? What are some of the assets? Do they own 50 percent of Coke? Do they own GM? They have to have sort of a flavour to what they own. Are they into manufacturing? Is this one of their strengths? Are they a vulture fund? I do not know. Are they a bottling company? There has to be something that they are known for.

Ms. Mihychuk: It is my understanding that with pools of this type, private capital pools, which is a limited partnership, there are several, or many in the United States, and that pension funds can invest in these private capital pools. What they do is use the money to invest in companies, sometimes to restructure, to do some, I guess, restructuring with companies. Then their ulti-mate goal is to sell them off then to another manufacturing consortium or purchaser or whomever. We have very limited knowledge on the specifics of the capital pool, who is invested, and the companies that that private pool has invested in. It is our understanding, both from the finan-cial community and checked by an independent group, Ernst & Young independent group, that this is a company that has significant capital, has proven as being investors in this company, and that they indeed are able and willing and have done this in the past. I am not quite sure what the member is looking for, exactly who is invested in this private capital pool. We will endeavour to find out as much as we can, as I have indicated, and get back to the member as soon as we can with any further information that we can pull together for him.

Mr. Jim Rondeau, Acting Chairperson, in the Chair

Mr. Schuler: I think the answer that the minister was grappling with was very easy. "I do not know" could have been one of the answers. It might have been a little shorter. I appreciate it because I know a lot of individuals have tried to find something out. I guess that is the concern I have, is that there is very little to be known about JLL. The minister's boss spent a considerable amount of time talking about good faith and those kinds of things. I would suggest to the minister that good faith does not make good public policy. That does concern me. I certainly would not invest my money into something unless I had some very good information on who they are, what they own, and what focus the fund has. I think that is just a reasonable question to ask. But we will leave it at that. The minister has endeav-oured that she will look into it and see if she can get some of that information back to the com-mittee, and we would certainly appreciate it.

Ms. Mihychuk: We do not have the document as to exactly when the first money was flowed, but we will get that for the member tomorrow.

Mr. Schuler: Of course I understand. Why would the minister think we would ask any ques-tions about that particular document? Clearly I understand why she would not have that docu-ment handy, because MCI is hardly something that would probably come up at these Estimates.

My question then to the minister

The Acting Chairperson (Mr. Jim Rondeau): Through the Chair.

The next question I have brings it a little bit closer to home. The minister mentioned 2001 the approach was made, May 2002 the agreement was signed. I understand it was about February 2003 when the first monies were flowed. Am I correct in that, or when were the first monies flowed?

1300 layoff?

/Ms. Mihychuk: I became aware of the situation when the company notified its workers, and there was a bulletin, I understand, put up in the work site. Media then came to me with the infor-mation, so I became aware of the situation on August 28, 2003.

/Mr. Schuler: So $20 million of the public's money was given to Motor Coach Industries for a bailout, and the Government is unwilling to tell us how many buses were on the docket, which spells very, very poorly for what this Govern-ment did. My question to the minister: Why is she not forthright. Was the order book that weak that the minister is going to hide behind false claims of secrecy and not divulge that information?


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