FAQ's Regarding Loans Provided to Olds Institute /Olds Fibre Ltd. (O-NET)

A list of commonly/frequently asked questions and answers regarding the loans provided to Olds Institute for Community and Regional Development (aka OICRD; Olds Institute and OI) /Olds Fibre Ltd. (aka Olds Fibre or OFL) have been separated into various topics below. Click on the topics  for access to the FAQs. 

Information on Loans Provided to Olds Institute/Olds Fibre Ltd.

BACKGROUND: The Town of Olds’ involvement and support in the fibre optic network project (high speed internet) has been to provide loans to Olds Institute to finance the construction of the Olds Connected Community Network (OCCN) and the creation of O-NET which operates under Olds Fibre Ltd.

How much funding has the Town provided to Olds Institute for the Financing of O-NET?

  • In 2010 the Town provided a loan of $6M dollars to put into the Fibre Optic Network system (also known today as O-NET).
    • Payments on the $6M loan were for principal and interest over a 10-year amortization period.
  • In 2014, the Town provided an additional loan of $8M dollars to continue to build O-NET.
    • Payments on the $8M dollar loan were for principal and interest over a 15-year amortization period.
  • At this time in 2014, the outstanding loan amounts totalled $14M.

Why were the loans for $14M Refinanced in 2017?

  • In 2015, Olds Institute came to the Town asking if they could be reloaned the principal payments that they had previously made. Over the next few years, the Town reloaned $3,877,191 to Olds Institute, which was the maximum allowable under Bylaw 2017-13.
  • Olds Institute then asked the Town to facilitate the refinancing of the $14M with a longer amortization period (25-years) in order to lower the semi-annual payments.
    • The Town, through Alberta Capital Finance Authority (ACFA) looked at refinancing the $14M loans over a 25-year amortization period.
    • Alberta Capital Finance Authority agreed to refinancing the total debt that was outstanding with them, which at that time was $10,108,805.
    • The other $3,887,191 (total principal payments made on the debenture from 2010 to 2017) had been paid to ACFA, and then re-loaned to Olds Institute by the Town.
    • The refinanced debenture was at Olds Institute's request INTEREST-ONLY until September of 2021 (3-years).
    • The reloan from the Town of Olds to Olds Institute of $3,887,191 was set up in the same manner as the ACFA loan bearing the same interest rate and INTEREST-ONLY payments until September of 2021.

In September of 2021, what is the interest and principal payment due on the loan payments?

  • The next payment, due September 15, 2021, is $452,646.87 ($217,374.17 principal + $235,272.70 interest).


Was there additional financing provided to Olds Institute?

Did the Town provide/other additional funding to assist OIds Institute?

  • Yes, the Town has also provided a guarantee on a Loan of Credit for $4M. As of June 21, 2021, $3,344,537 has been drawn on that Loan of Credit.
  • In 2018, the Town provided Olds Institute with $600,000 through a Community and Regional Economic Support (CARES) Grant to support business planning, marketing and promotional purposes for O-NET. The Provincial Government provided the other $600,000 for a cost share total of $1.2M.

    Outside of the outstanding Loans and CARES Grant to fund O-NET, how much has the Town provided in funding to Olds Institute over the years?

    • Over and above the support to O-NET, the Town, since 2004, has provided over $3M dollars in annual contributions, salaries and other grants to Olds Institute to support Economic Development, Social Development and Tourism for the Town of Olds.
    • In 2018, the Town wanted to create a new mandate and funding contribution system where Town of Olds priorities would be addressed such as the following:
      • Olds Institute relationship with Council
      • Clarification with Administration
      • Economic Development
      • Tourism
    • Negotiations ensued, however the relationship did not advance as the Olds Institute Board indicated that they were an independent entity and did not have to prioritize the Town’s items.

    Who approved the loan refinancing, and when did that process begin and end?

    The previous Town Council approved the refinancing of the Olds Institute Loans as the Olds Institute was facing cash flow problems. Below is the sequence:

    • Bylaw 2017-12 was passed in July 2017 for the Town to incur a debt of $14M. 
    • Bylaw 2017-13 was passed in July 2017 for the Town to issue a loan for $14M to Olds Institute.
    • The Town applied for approval from Alberta Capital Finance Authority (ACFA) (Lender for Municipalities).
    • ACFA would only refinance $10,171,325 (outstanding balance of the loans in July of 2017) as $3,887,191 had been paid off the principal amount of the loans since 2010.
    • Therefore, the newly elected Town Council passed a new Bylaw 2017-16 in November 2017 to incur a debt of $10,171,325 and rescind Bylaw 2017-12 as ACFA would only refinance $10,171,325 of the $14M request.
    • Bylaw 2017-13 was passed in July 2017 and remains in place today. However, the Town of Olds has used its own cash flows to provide for the reloan of $3,877,191.

    As of today, what is the total debt: $14 million or $18 million?

    • The outstanding loans total a principal amount of approximately $14M owing to the town. This, is in addition to the guaranteed line of credit in the amount of $4.M. As of June 21, 2021 $3,344,537 has been draw on that Loan of Credit which adds up to nearly $18M.

    When is the next payment due? How much is that payment?

    • The next payment of $452,646.87 ($217,374.17 principal + $235,272.70 interest) is scheduled for September 15, 2021.
    • As per the schedule, the Olds Institute and OFL Boards were to start making principal payments on their loans in the fall of 2021.
    • In 2022, two principal and interest payments are due totaling $905,293.74.

    What non-financial support has Town Council(s) provided to O-NET?

    • Town councils since 2010 have been in front of provincial and federal ministers, as well as representatives from other municipalities across the province and country promoting O-NET. Town councils have constantly spoken about the success of the work done by the many volunteers and staff of Olds Institute/Olds Fibre Ltd.
    • Moreover the Town arranged for Sandra Jansen, former Minister of Infrastructure; Stephen Mandel, former Alberta Party Leader;   MLA Nathan Cooper and MP Earl Dreeshen to meet and discuss O-NET and tour their facilities.

    Confidential Information

    What is Olds Institute/Olds Fibre Ltd./O-NET worth?

    • This information is confidential. FOIP Section(s) 16 – Disclosure Harmful to business interests of a third party; Section 17 - Disclosure Harmful to Personal Privacy & Section 27 - Privileged Information.

    How much is the Town's legal bill (relating to BDO Canada Limited) costing taxpayers to date?

    • As this is an active file, the Town of Olds is unable to release this information at this time.

    Why was a Forbearance Agreement Issued to Olds Institute/Olds Fibre Ltd?

    BACKGROUND: The Town of Olds issued a Forbearance Agreement on May 22, 2020. The Forbearance Agreement was issued to set a time period for the Olds Institute and Olds Fibre Ltd. to find a long term solution for the continuance of O-NET.

    Some Olds Fibre Ltd. and Olds Institute Directors have indicated that the Town did not meet or allow the Olds Institute and Olds Fibre Ltd. Board(s) to develop a Plan?

    • The Town, based on the advice of BDO Canada Limited allowed for three extensions of the Forbearance agreement in order for the OICRD/OFL Advisory/Negotiating Committee to find options to substantially reduce or eliminate the debt that Olds Institute owes the Town. TheForbearance Agreement was put in place effective May 22, 2020 and ended on June 25, 2021.
    • The Olds Institute and Olds Fibre Ltd. Boards formed the OICRD/OFL Advisory/Negotiating Committee in October 2020 and at no time requested a council member to participate on that committee. BDO Canada Limited has provided advice to this committee and reported back to Council on the status of this file.
    • The Town held two special meetings with Olds Institute and Olds Fibre Ltd. representatives in September and October of 2020.  During these meetings, both Olds Institute and Olds Fibre Ltd. indicated they had a number of options to pursue and asked the Town to give them additional time to pursue those options. The Mayor and Deputy Mayor also met with members of the Olds Fibre Ltd. executive on three additional occasions to answer questions.
    • The Olds Institute/Olds Fibre Ltd. Advisory/Negotiating Committee chose one of the options to pursue. The company that expressed interest had five months to put together an offer (during which time council extended the Forbearance Agreement twice to allow for sufficient time), however an offer was never presented and the company never requested the town extend its exclusivity.
    • The Olds Institute and Olds Fibre Ltd. Boards were unable to find an investor in that time period.

    The Olds Fibre Ltd. Board Chair indicated that Olds Institute and Olds Fibre Ltd. had not missed a payment? Can the Town comment on this?

    • Under the current loan terms, no payments of principal have been made. To date ONLY interest payments have been made.
    • As per the schedule, the OIds Institute and Olds Fibre Ltd. Boards were to start paying principal on their loans in the fall of 2021.
    • According to the financial review conducted by BDO Canada Limited, as the Town's financial advisor, Olds Institute and Olds Fibre Ltd. do not have sufficient revenues to be able to make the principal and interest payments. 

    A Public Hearing will be held July 26, 2021

    BACKGROUND:  Proposed Resolution #21-251 

    A Public Hearing will be held July 26, 2021 at 1:00 p.m. Council Chambers, 4512 – 46 Street, Olds, Alberta

    What will the format of that public hearing be?

    Can members of the public ask questions? If so, can they ask them right there at the meeting or do they have to submit them ahead of time?

    • We encourage residents to submit questions prior to the meeting, however questions may also be asked at the hearing.
    • Written submissions may be made prior to 4:30 pm on July 19, 2021,  by mail or delivered to the Town of Olds, 4512- 46 Street, Olds, AB T4H 1R5 or,
    •  Faxed to 403-556-6537, or
    •  Emailed to legislative@olds.ca
    • All submissions received will be included on the Council Agenda. 
    • Any person(s) for, against or impacted by the formation of a Municipally Controlled Corporation may speak at the public meeting for up to five minutes.

    Questions Regarding a Municipally Controlled Corporation (MCC)

    How does consolidating OI into a municipal corporation solve the debt problem?

    • Consolidation of assets, operations, revenues and debts into a single Municipally Controlled Corporation does not in and of itself solve the Town’s debt limit issues.

    • Consolidation does, however, substantially reduce the existing complications of splitting the ownership of assets between OI and OFL, and provides many more options for how to capitalize and finance O-NET going forward. This means that the business structure will be prepared and ready for seeking and accomodating potential investors.
    • One main advantage is that a Municipally Controlled Corporation can borrow on its own, and as a business enterprise provide services to the public. Therefore, this would not be considered Town of Olds debt, nor would it be included within the Town’s total debt calculation.
    • By consolidating all assets and revenues, the Municipally Controlled Corporation becomes well capitalized, which places it on a better footing to finance its own operations thus reducing reliance upon the Town.

    Why was a Municipally Controlled Corporation (MCC) not set up originally in 2010?

    • At the time of the making of the loans to OI, the creation of a municipally-controlled corporation was a complicated and expensive exercise, and generally not consented to by the Minister of Municipal Affairs unless there was a regional purpose to the corporation (i.e. multiple municipal owners). As a result, the Town’s loans and financial assistance to OI were an alternative to direct investment that otherwise would not have been possible or practical at that time.
    • The Town has always viewed its financial support as an investment, and today the Municipal Government Act allows for the creation of municipally controlled corporations in an efficient manner making much of the existing arrangements unnecessarily complicated.
    • While the OCCN and O-NET concept was well ahead of its time, interest by other municipalities in fibre networks and services has caught up to Olds, and while too early to tell this does offer additional opportunities for investment. All of which have indicated to the Town that restructuring the Town’s investment through a municipally controlled corporation simply makes the best sense, both now and for the future.

    Why is the Town doing this?

    • Debt – a municipality is limited to what it can borrow, and the combined effect of the Town’s borrowings and loan guarantees to fund and support the development of the OCCN and O-NET leaves the Town with extremely limited ability to borrow to fund other municipal priorities and community needs. It is the existence of sizeable debt for one single pursuit that is crippling, whether or not the payments are up to date on the loans provided to Olds Institute. This is why the Town requested that Olds Institute and Olds Fibre seek investment or financing to reduce or eliminate their reliance upon the Town;
    • Ability to Make Debt Payments – while O-NET is a successful business operation, and has made its interest payments under the Town loan to date, interest and principal payments are to commence this fall. BDO Canada Limited (BDO) was engaged as a financial advisor to conduct a debtor review (very common with lenders) to assess the finances of Olds Institute and Olds Fibre Ltd. and their ability to make both principal and debt payments. BDO determined that the combined revenues of Olds Institute and Olds Fibre would not be sufficient to pay principal and interest payments as they came due.
    • Postponement of Repayment – based upon the assessment by the Town’s financial advisor, the repayment of the Town’s loans would have to be substantially delayed based upon current and projected revenues. This would prolong subsidizing by the Town, as well as prolong the impact of debt on the Town beyond the current 25 year term of repayment which already runs to the year 2043. The Town’s financial advisor has indicated financials for Olds Institute and Olds Fibre Ltd. show that repayment would be delayed well beyond the year 2043.
    • Fiscal Responsibility – we all like quality services from O-NET, but at what cost to the Town and its residents and businesses? Fiscal responsibility is in the best interests of the residents and businesses of Olds and requires that the Town proactively addresses the impact of debt and issues created by the inability to repay it. Awaiting default is not proactive and not in the best interests of the residents and businesses of Olds.

    Should O-NET be a Town Utility?

    Is the Town planning on making O-NET a public utility?

    • There are no plans to bring the operations or assets of Olds Fibre Ltd. and O-NET under direct Town operation.

    Could the Town of Olds run O-NET as a Utility?

    • The result of the receivership, if it proceeds as planned, will be a municipally controlled corporation in the form of Olds Fibre Ltd., just as it exists today, which will continue to provide its services and Olds Fibre Ltd. will own the fibre optic network that it currently operates and maintains. In the Town’s opinion, and based upon advice received, this will make a more efficient business and operating structure.
    • Unlike other utility services, telecommunications is a federally regulated undertaking. The Town has little to no authority under the Municipal Government Act to either regulate or impact telecommunications services. The Town cannot impact telecommunications through bylaws, nor control or direct services through exclusivity requirements. Consequently, there would be no advantage gained by owning and operating a telecommunications service directly as a department or division of Town operations.
    • Municipalities are treated differently under federal telecommunications legislation and related caselaw, and in many cases substantially disadvantaged. Because of this legislative and legal landscape, there would likely be several competitive disadvantages that would be incurred by the Town taking ownership of telecommunication infrastructure and services directly. Consequently, telecommunications operations are best delivered by a non-municipal entity.
    • Under Federal telecommunications legislation, the change of service provider from Olds Fibre Ltd. to the Town would require a significant and substantial regulatory process involving the Canadian Radio-television and Telecommunications Commission (CRTC). This would be at a substantial additional cost and process, with little to no ultimate value in undertaking that process or incurring those costs.
    • If O-NET was owned and operated directly by the Town as another utility operation, this would effectively eliminate the opportunities for investment by other parties and prevent the Town from pursuing those opportunities to reduce or eliminate the current burden of debt.
    • If O-NET was owned and operated directly by the Town as another utility operation, there would be no change of service and the costs of the service to consumers would still need to cover costs of operation and capital repair/replacement.
    • In short, there are no advantages, and there are substantive disadvantages, in owning and operating a telecommunications system and service under direct municipal ownership and operation.


    Current Responsibilities:

    • As the Receiver that has been appointed by the Court pursuant to the Receivership Order, BDO Canada Limited is in control of all assets and operations of the Olds Institute. Accordingly, the Receiver makes the day to day decisions for the entity, in consultation with the directors, officers and staff of Olds Institute.
    • As Olds Institute is the sole shareholder of Olds Fibre Ltd. (Olds Fibre), BDO Canada Limited (BDO) as the Receiver exercises the rights of Olds Institute as the shareholder. In addition, with the consent and agreement of Olds Fibre, BDO has been appointed the monitor of the operations of Olds Fibre. BDO is working alongside the directors, officers and staff of Olds Fibre in the day-to-day decisions and operations. As a result, the operations of Olds Fibre are business as usual, subject to the oversight and assistance that BDO provides.  
    • The Town is the Lender to Olds Institute (and that loan is guaranteed by Olds Fibre Ltd.), who is the secured party with first priority over the assets of both Olds Institute and Olds Fibre. As a result, the Town is entitled to claim and seek ownership of the assets in order to satisfy the debts owed. The Town is working alongside the Receiver in the ultimate decision and destination for the assets of Olds Institute and Olds Fibre, subject always to the review, approval and final decision of the Court.

    Under the New Structure, who will the volunteeers and their committees report to?

    • Currently, any volunteers or committees of Olds Institute would be reporting to and taking direction from BDO Canada as the Receiver. Upon the discharge of the Receivership, the volunteers and committees would or could carry on normal operations of Olds Institute with respect to whatever activities is chooses to pursue.
    • Currently, any volunteers or committees of Olds Fibre would report to, and, take direction from the same authority that they have historically reported to or taken direction from. Assuming that the Receivership results in the reorganization sought by the Town, upon discharge of the Receivership volunteers and committees will operate within the organizational structure that is created under the direction of the Town and the future board of directors.