Bixi: $42 million debt, $6.5 million deficit
Published Tuesday, September 24, 2013 11:21AM EDT
Last Updated Tuesday, September 24, 2013 10:36PM EDT
Montreal's Auditor General says the company that runs the Bixi system is once again having financial problems.
Two years ago Jacques Bergeron's wrote a report indicating that ever since it was founded in 2007 the Public Bike System Company (PBSC) has always been subject to financial irregularities.
The situation was so dire in 2011 that the city of Montreal loaned the Public Bike System $37 million, and acted as a guarantor for another $71 million in loans. Soon after that report the province ordered the PBSC to sell off the part of the company that was in charge of its international expansion.
Now the company is tens of millions of dollars in the red: $42 million in debt, with an operating deficit of $6.5 million.
Projet Montreal leader Richard Bergeron calls it "very worrisome."
"I'm very disappointed. I knew... I suspected that the situation was not good at Bixi but what we saw today still is a big surprise," said Richard Bergeron.
He said there is a good chance the company will go bankrupt.
"You know when you speak about bankruptcy there's nothing worse than that."
The city of Montreal is confident it won't come to filing for bankruptcy protection and is certain the provincial government will help out. Minister for Montreal Jean-Francois Lisée said the province would be willing to lend the BPSC $5 million.
"We have a claim to Investment Quebec to have some money," said Real Menard, the member of the Executive Committee in charge of transportation.
He said the current difficulty is strictly a matter of cash flow, pointing out that other cities where Bixi has expanded have yet to pay for the system.
"We believe some cities owe money to Bixi and we will receive money coming from the United States soon," Menard said.
Bixi is scheduled to expand into four more cities in 2013 and 2014
Another option being discussed, and preferred by mayoral candidate Marcel Coté, is to transfer Bixi to private investors.
"They'll operate it. It's a great concept, it's a great product, it's undercapitalized and it tells you one thing: cities should not be in commercial business," said Coté.