Nova Scotia’s government has agreed to give the operator of the Nova Star ferry an additional $4.4 million so it can pay its overdue bills.

That doesn’t guarantee the ferry’s return next season, but it keeps the business afloat for a few more months while the provincial government struggles to find a way to run the service without losing so much money.

The infusion of cash comes on top of the $19 million ($21 million Canadian) that the province already has spent on the service this year – a sum the province had expected would be spread out over a seven-year period.

The new money comes with a catch: The province is now putting Nova Star Cruises under additional scrutiny and imposing stronger financial controls, a top official with the Nova Scotia government said Tuesday.

One of the world’s largest auditing companies, KPMG, will examine Nova Star Cruises’ business practices and audit its books with the goal of finding ways to increase efficiency and reduce costs, Michel Samson, minister of Economic and Rural Development and Tourism, said at news conference in Halifax.

He said Nova Star Cruises also must provide detailed financial reports to the province, including weekly cash-flow projections.

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The provincial government is committed to continuing ferry service between Portland and Yarmouth, Nova Scotia, but there is no guarantee that the Nova Star will return next season, Samson said.

“We are going to do everything possible to make sure the ferry service is maintained between Yarmouth and Portland,” he said.

The company ended its first season Tuesday owing money to fuel suppliers and Fleet Pro, the Florida-based company that hired and managed the ship’s crew.

Although the sailing season is over, Nova Star Cruises will continue incurring expenses, and some of the new cash provided by the province might be spent on offseason expenses, such as berthing fees if the operator can’t find a winter route for the ferry, Samson said.

He did not know the extent of the company’s losses, saying the accounting work hasn’t been completed.

Samson said Maine also benefits from the ferry service and should contribute to keep it going. In a letter he sent to the province more than a year ago, Gov. Paul LePage said the state would help Nova Star Cruises secure a $5 million line of credit for the service from a commercial bank. That never happened, even though the state has the ability to provide loans to companies though the Finance Authority of Maine.

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That quasi-state agency’s Commercial Loan Insurance Program helps companies get a loan from a commercial bank by guaranteeing all or a portion of the loan.

Samson said LePage told him during a Sept. 29 teleconference that he plans to submit legislation seeking a $5 million loan guarantee for the ferry service.

Officials from the governor’s office and the Finance Authority of Maine did not return phone calls seeking comment Tuesday.

Officials from ST Marine, the Singapore shipyard that built and owns the Nova Star, will travel to Nova Scotia to discuss the ferry service with provincial officials, Samson said. The company has a 10 percent ownership stake in Nova Star Cruises.

Nova Star Cruises has an agreement with ST Marine to charter the vessel for two more years, with options to extend up to seven years.

Samson said the province is pushing Nova Star Cruises to secure a winter route for the ferry to avoid the costs of berthing it until next year’s sailing season begins in May. Those costs include fuel for transporting the ship to a southern port, berthing fees and labor fees for a crew that would maintain its operating systems, he said.

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Mark Amundsen, president and CEO of Nova Star Cruises, announced Sept. 10 in Portland that the company had found a winter route and that details would be announced the next week. But no announcement was ever made, and the company is still mulling options for what to do with the vessel this winter, Samson said.

Dennis Bailey, a spokesman for Nova Star Cruises, said Tuesday that the company will have a winter route and that it is looking at several options.

Restoring the service is critical to the economy in southwestern Nova Scotia, Samson said. Visitors arriving in Yarmouth by ferry spent $13 million in the province this season, the first summer the ferry service had operated since 2009, and the number of New England visitors to Nova Scotia increased 17 percent from last year, he said. Monthly visitor numbers jumped 26 percent in July and 31 percent in August over the same periods last year.

He would not guarantee that the service will return next season, however, saying only that he was “hopeful.”

The Nova Star has made its final scheduled crossing of the Gulf of Maine, leaving Portland on Monday evening and arriving in Yarmouth on Tuesday morning.

It finished the season with a total passenger count of 59,000. At the start of the season, company officials expected the ship to carry 100,000 passengers.

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Bailey said the company ran into several obstacles this season. The hardest to overcome was its late start. Tickets first went on sale in late March, just eight weeks before the sailing season began on May 16. The company wasn’t able to sell tickets or advertise until it obtained a permit from the Federal Maritime Commission.

As a result, it missed deadlines to win business with bus tour companies, which typically book tours a year in advance.

Bailey said the bus companies now have plenty of time to market the trip to their customers. People can count on the service returning next season, he said.

“We are making our plans with the intention for being here next year,” Bailey said.

Portland Mayor Michael Brennan, who traveled on the ferry to Yarmouth two weeks ago, said the ferry is boosting tourism in both Maine and Nova Scotia and that there needs to a more “balanced relationship” between the state and the province to support the service.

During his trip, Brennan told Nova Scotians that Maine officials won’t be able to make any commitments until after the gubernatorial election is over.

 


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