Laurentian University president Robert Haché said the university’s insolvency restructuring efforts have already cost the university just over $9.8 million.
He spoke about the costs at the Sept. 28 meeting of the Laurentian University senate.
The subject was first brought up by senator Albrecht Schulte-Hostedde at the Sept. 21 Laurentian University senate meeting.
“The university is a public institution,” said Hostedde, a behavioural and evolutionary ecologist and Laurentian professor.
“There are a number of private-sector actors that I’m going to list. Ernst & Young (the firm appointed by the courts as the monitor of Laurentian’s restructuring), Thornton Grout Finnigan (insolvency lawyers hired by LU), Firm Capital Corporation (which holds Laurentian’s debtor-in-possession loans).”
Hostedde also brought up Laurentian’s hiring of Lou Pagnutti as its chief development officer, who could be paid up to $52,000 per month, as well as the government and real estate reviews being done by external consultants.
“I’m wondering if you can transparently give us the cost of this restructuring in dollars,” he said.
“This has cost the university a tremendous amount of money, and I’m not convinced that that money couldn’t have been applied to restructure the university in a way that would have been perhaps not as deadly as it has been.”
Haché said during the Sept. 21 senate meeting that he didn’t have the information readily at hand, but it was available in the seventh report put out by Laurentian’s insolvency monitor, Ernst & Young, in August.
The Sept. 21 senate meeting was continued Sept. 28 because members of the governance body opted not to continue that day beyond 6 p.m.
While Schulte-Hostedde was not able to attend the Sept. 28 meeting continuation, the matter was brought forward again by a colleague, Ernst Gerhardt, the chair of Laurentian’s English department.
This time, Haché had an answer to the question readily at hand.
“It is an expensive process,” he said. “It comprises many components — the court-appointed monitor and insolvency counsel, counsel to the monitor, actually, chief redevelopment officer, as senators know.”
He said going through the monitor’s reports, “the total costs of restructuring for all of those components and more that I haven’t mentioned adds up to just over $9.8 million.
“It indeed is an expensive process, but it happens to be measured as well against the alternative, which would be that the university, of course, would have had to cease its operations back at the end of January.”
Haché said he also wanted to highlight that Laurentian has freed up funds as a result of the restructuring — reducing the operating base of the university by $40 million a year, or 25 per cent.
“The other thing to highlight is that the restructuring costs are one-time costs, whereas that reduction in operating costs is expected to be something that the university will benefit from over the longer term, as it completes the restructuring of its operations and exits from the CCAA process.”
Gerhardt asked Haché if the $9.8 million figure included the fees and interest on the debtor-in-possession (DIP) loans it has taken out to backstop the university during its insolvency.
So far, Laurentian has been approved for more than $35 million in DIP loans.
Haché said he didn’t have that information readily at hand, although he did share that the interest on the DIP loans is at eight per cent, and there are fees attached as well.
He said Laurentian has also not accessed all of the DIP funds available to the university at once, and the interest only applies once the money is accessed.
Gerhardt said during the meeting he’d just looked up the information, and “I believe it’s about $1.5 million to the end of August, the interest and the fees.”
The seventh report of the monitor also provides a projection of continued restructuring costs from August until the beginning of February 2022. That’s expected to cost Laurentian an extra nearly $10 million, and the DIP interest loan fees another $1.8 million.