The recent merger of Ascent/St. Thomas Energy and Entegrus Powerlines appears to have done little to unplug the city from controversial business decisions previously undertaken by the utility.
As a case in point, on Monday (Oct. 15), the city was named in a multi-million dollar lawsuit.
The City of St. Thomas, Ascent Renewables, Ascent Group Inc, Ascent Energy Services and a numbered company, 2154310 Ontario Inc., are being sued for general damages in the amount of $7,850,000 by a numbered company, 1787868, operating as Focus Group based in London.
The statement of claim was filed at the Elgin County Courthouse.
All of the defendants are ultimately owned and controlled by the city.
According to the claim, nearly 20 years ago the city undertook an initiative identified as “Partners in Power.” Through its ownership and funding provided by St. Thomas Energy Inc., the city created a series of corporations to allow it to attempt to capitalize on growth opportunities and become more involved in the growing renewable energy sector.
These corporations included Ascent Energy Services Inc. (formerly known as St. Thomas Energy Services Inc., STESI) and Ascent Group Inc. (formerly known as St. Thomas Holding Inc., STHI). These companies operated under the name Ascent Group, with all shares controlled by the city.
In 2010, the city entered into an agreement with Jeffery Lang, president and CEO of both 1787868 Ontario Inc., and Terra Vox, whereby it would acquire 51% of the shares of the latter for $239,000, plus an agreement to provide further funding to Terra Vox by way of shareholder loans totaling $200,000.
In February of 2011, the St. Thomas Economic Development Corporation on its website quoted STHI CEO Brian Hollywood as saying, “The Terra Vox acquisition represents the next generation of our service offering. In addition to our core business offering in the renewable energy field, the energy-from-waste technologies partnering and licensing agreements we will acquire through Terra Vox will allow us to create competitive waste management solutions across the province.”
“STHI and Terra Vox have been working together as strategic partners for over one year,” added Lang. “This transaction formalizes what is already a successful working relationship. Our two companies share strong values and a desire to advance alternative energy production in North America.”
The EDC posting went on to note, “Through its partnerships, Terra Vox offers 30 years of waste management experience and uses proven European waste-to-energy technologies to convert waste to energy in a sustainable, economically viable and environmentally friendly way. The Terra Vox acquisition provides STHI with exclusive licensing agreements for certain technologies to provide innovative energy solutions.”
Hollywood enthused at the time, “This is a strategic opportunity for St. Thomas Holding and Terra Vox to expand our relationships in the alternative energy market. There is an abundant North American market to establish waste-to-energy facilities for public and private customers.”
Terra Vox had made contact with the Ford Motor Company with a view to redeveloping the site of the Ford Canada St. Thomas Assembly Plant, which Ford was in the process of decommissioning.
“. . . the senior management team of Ascent was attempting to shield their investment record from the shareholder, the City of St. Thomas, and the taxpayers of St. Thomas.”
The aim was to repurpose the site as a waste-to-energy plant. According to the statement of claim, the city had expressed an interest in public-private partnerships and Lang began introducing city representatives to Ford officials.
In a recent conversation with Lang, he verified the city, through Ascent, was involved in many of the discussions with Ford, including attending meetings in Dearborn, Michigan, and drafting documentation related to the redevelopment of the site.
Lang added the Ford project was a priority for the city. As a result, and with the knowledge and approval of the city, Terra Vox focused its efforts on this project, to the detriment of other potential revenue-generating projects.
In April of 2012, according to the statement of claim, the senior management of STHI advised Lang they would not recommend any further cash investment in Terra Vox, now known as Ascent Renewables.
According to Lang, the negotiations at this time with Ford had progressed to the point where an offer to purchase the sprawling site had been drafted by Ascent Holdings Inc., and submitted to Ford.
At the end of April, STHI management made the decision to place Ascent Renewables in “a dormant state, as this would be the most palatable state from a public relations perspective,” according to the statement of claim.
The claim further alleges “the senior management team of Ascent was attempting to shield their investment record from the shareholder, the City of St. Thomas, and the taxpayers of St. Thomas.
“The decision to shut down Ascent Renewables Inc. (Terra Vox) was done with a view to protecting the reputations of the senior management team and not in the best interests of Ascent Renewables (Terra Vox) or its minority shareholder, the plaintiff, 1787868 Ontario Inc.,” which estimates it has sustained losses in excess of $4 million.
None of the allegations have been proven in court and the city has 20 days to file a statement of defense or it can file a notice of intent to defend, which gives it an additional 10 days.
Questions and comments may be emailed to: City Scope
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Ian, thank you for bringing this to our attention. I appreciate the service you bring to our City. You have not heard the last of me on this one…