April 23, 1998
Deputy Premier and Crown Investments Corporation (CIC) Minister Dwain Lingenfelter said today that continued aggressive debt reduction significantly improved the Crown sector's financial position in 1997 and has set the course for a promising future.
CIC and its subsidiary Crown corporations, SaskPower, SaskTel, SaskEnergy, Saskatchewan Government Insurance (SGI), Saskatchewan Transportation Company (STC), Sask Water, Saskatchewan Opportunities Corporation (SOCO) and Saskatchewan Government Growth Fund (SGGF), tabled their 1997 Annual Reports with the Legislative Assembly today. Annual financial statements were also tabled for Crown corporations' pension plans and wholly-owned subsidiaries.
"We were able to reduce debt in the Crown sector by more than half a billion dollars in just one year," Lingenfelter said. "By continuing to tackle debt reduction head on and manage our corporations wisely, we will be able to pay greater dividends to the General Revenue Fund (GRF) in the coming years. That money will benefit all Saskatchewan people by helping to pay for such things as health care, education and highways."
For the third year in a row, CIC was able to declare a regular dividend of $50 million to the GRF. CIC expects to double this amount to $100 million in 1998 due to a lower debt load and lower interest payments on debt.
Other highlights of the 1997 Annual Reports tabled today include:
CIC reduced its consolidated debt by $593.3 million from 1996. Debt is now $3.5 billion, compared with $4.1 billion a year ago;
The debt ratio for the Crown sector decreased to 56 per cent from 62 per cent in 1996. Since 1993, the ratio has dropped by 13 percentage points, reflecting debt reduction of $785 million;
Besides the regular dividend of $50 million, CIC also paid a special dividend of $191.5 million to the GRF. The money represents the GRF's share of the second instalment from the sale of 10.1 million Cameco Corporation shares in 1996;
CIC sold its Wascana Energy Inc. shares for a gain of $72.6 million, with proceeds going toward debt reduction;
Subsequent to year end, CIC sold its 50 per cent interest in the Bi-Provincial Upgrader for $310 million. As a result, CIC expects to declare a special dividend of $100 million to the GRF in 1998 and to repay equity advances of $85 million;
SaskPower reduced its long-term debt by $145 million, to $1.7 billion, while maintaining its freeze on electrical rate increases. Its net earnings were $132 million, down from $139 million in 1996;
SaskTel generated $96.3 million in earnings from operations. After recording a non-cash charge of $55.7 million on assets, consistent with industry practice, the corporation had net earnings of $40.6 million, compared with $84 million in 1996. Meanwhile, the corporation's strong customer focus helped it retain more than 90 per cent of its customers in the competitive long distance market;
SaskEnergy reduced its long-term debt by $26.5 million, to $682.2 million, while offering the lowest residential natural gas rates of any province in the country;
SGI CANADA's net earnings rose to $24.3 million, up from $21.6 million in 1996, due to growth in premiums, and fewer summer storms and crime-related claims. The Saskatchewan Auto Fund, which is the stand-alone, compulsory auto insurance program, is not included in SGI or CIC's consolidated financial statements. The Auto Fund recorded a loss of $15.2 million in 1997;
STC had an operating loss of $6.6 million, compared to $6.2 million in 1996. 1997 losses included one-time restructuring and rationalization costs of $2.1 million. As well, CIC extinguished STC's $26 million debt, leaving no debt at year end;
Sask Water lost $1.9 million, due mainly to initial startup costs of the Wakaw-Humboldt regional water supply system and SPUDCO, but the corporation still managed to decrease its debt by $1.1 million, to $40 million;
SOCO had net earnings of $2.3 million, up from $848,000 in 1996; and
SGGF Management Corporation lost $229,000, but its underlying fund companies to date have invested $132 million in new or expanding businesses in Saskatchewan.
"Overall, these results show that the Crown sector is in good financial shape," Lingenfelter said. "The people of Saskatchewan are continuing to get quality, reliable services from their Crowns at reasonable rates, while at the same time getting a good return on their investment."
Crown Investments Corporation
Phone: (306) 787-9039