Kruger Products' biomass gasification plant in New Westminster, B.C..)Kruger
The Caisse de dépôt et placement du Québec is once again under fire for allegedly not doing enough to foster the province's economic development.
Parti Québécois Leader Pauline Marois has come out swinging against Canada's largest pension fund manager for lending $211-million to Montreal-based Kruger Products LP to expand a tissue mill in Memphis, Tenn.
Ms. Marois said Monday the Caisse's decision shows it "has lost its soul" and failed in its mandate to help Quebec's economy, given that privately held Kruger was also studying the option of expanding its plant in Crabtree, north of Montreal.
Expansion of the Crabtree facility would have created 100 new jobs in an economically depressed region and the Caisse should not have financially backed privately held Kruger's decision to opt for Memphis instead of Crabtree, she said.
The Caisse fired back, saying in a news release that it only decided to provide a loan to Kruger after the company informed it that talks with provincial investment agency Investissement Québec regarding a possible expansion at Crabtree had ended and that it had chosen Memphis over Crabtree for several reasons, including closer proximity to growing U.S. markets and the high value of the Canadian dollar.
The expansion of the Memphis facility presents a choice opportunity to increase the returns to the Caisse's Quebec depositors, as well as to back a Quebec company as it moves to strengthen its North American presence, the Caisse said.
"Homegrown companies must go where the markets for their products are and cannot rely only on the Quebec market," Normand Provost, executive vice-president, private equity and chief operations officer at the Caisse, said in a statement.
"We strongly believe that one of the ways for the Caisse to help nurture champion Quebec job creators is to support them in their expansion in new markets," he said.
Kruger spokesman Jean Majeau confirmed in an interview that the Caisse only came in once the decision to invest in the Memphis plant had been made and Crabtree was no longer an option.
The set-to is the latest flare up over the Caisse's dual mandate to help Quebec's economic development while also ensuring it gets the best returns on its investments.
In June, two high-profile Montreal businessmen who are mulling the launch of a new political party – former PQ minister François Legault and CIBC chairman Charles Sirois – accused the Caisse of doing too little to help local companies.
Caisse chief executive officer Michael Sabia has been highlighting efforts by the Caisse to invest in Quebec companies, especially in their efforts to grow outside the province.
Bertrand Marotte