Laurentian University is reporting a surplus of $52.6 million for the financial year 2022-2023, a year which the university still spent partially in insolvency.
The university’s board of governors approved LU’s 2022-23 financial statements, audited by the financial firm BDO, at their Oct. 20 meeting. (You can view those statements beginning at page 119 of the board package).
Universities must submit their financial statements from the previous fiscal year to the province and post them publicly by the end of this month.
Laurentian exited insolvency under the Companies’ Creditors Arrangement Act (or CCAA) Nov. 28, 2022, after nearly 22 months under creditor protection.
The university posted a deficit of $66.7 million in 2020-21 and a surplus of $16.8 million in 2021-22.
Laurentian’s excess of revenue over expenses for the financial year 2022-23, which ended April 30, 2023, was actually at $208 million before factoring in some numbers related to its insolvency.
“That's a huge number,” said Michel Piché, Laurentian’s interim vice-president, finance and administration.
“But keep in mind that these include a lot of the CCAA adjustments that had to be done as a result of the settlement of the plan of compromise or arrangement in November 2022.
“So excluding these other what we call other items, either restructuring or relating to CCAA, the university's excess of revenue over expenses was $52.6 million, compared to $44.5 million the previous year, an excess of $166.4 million relating to liabilities that were extinguished as part of their plan of compromise or arrangement, and also restructuring costs of $11.1 million compared to $27.8 million the previous year.”
As stated above, LU’s insolvency restructuring costs amounted to $11.1 million in 2022-23. That includes fees for lawyers and consultants (LU spent $6.1 million on its CCAA lawyers alone in 2022-23), interest on bridge loans and employee restructuring costs.
Also referred to by Piché was the $166.4 million in funds “related to the recovery from the CCAA proceedings.”
This means the amount the university’s finances changed when its “liabilities were legally discharged and released” upon the implementation of Laurentian’s plan of arrangement under the CCAA last November. That includes $89 million in long-term debt.
Laurentian’s finances also factor in $53.5 million for Laurentian’s creditors, to be recovered by the university once it sells university property to the province to fund the creditor pool. This sale of university real estate is still in the works.
Laurentian has already paid out $5.9 million to certain types of creditors, and another $47.5 million has yet to be paid out to remaining creditors, something that will happen once the real estate deal is completed.
The 2022-23 financials also show the financing related to a $35-million long-term loan with the province, to replace the bridge loans taken out by Laurentian during its insolvency.
During 2023, the university made principal payments totalling $592,000 on the loan and $884,000 in interest (no payments were made in 2022).
Piché said in terms of capital expenditures, these added up to $2 million in 2022-23, compared to just $400,000 the year before.
“That reflects our increased spending and deferred maintenance projects,” he said. “These projects do include critical equipment replacement and maintenance that were funded in part by a grant from the ministry’s facility renewal program.
“And as indicated previously in the closed session, Laurentian continues to manage a considerable deferred maintenance backlog, estimated at $135 million, which is subject to review.”
Piché said Laurentian ended the year with cash and short-term investments of $137.3 million, compared to $84 million the previous year.
The increase consists of $77.2 million in “positive cash flows from operating activities, a decrease of $20.2 million from financing, and a decrease of $3.7 million in investing activities.”
At the end of the 2022-23 financial year, the university had net assets of $191.6 million, an improvement of $196 million from previous year’s deficiency of net assets of $4.4 million, said Piché.
“So all of these CCAA-related adjustments helped to sort of put the balance sheet in a more sustainable position,” he said.
“The main contributor to the increase in net assets was the excess of revenue over expenses of $208 million, which was partially offset by a transfer of $14.3 million to the Northern Ontario School of Medicine to transfer their endowment, which it took over last year.”
Heidi Ulrichsen is Sudbury.com’s assistant editor. She also covers education and the arts scene.
