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Nova Scotians bail out U.S. ferry operator

Two people on Deer Island watch as the Nova Star cruise ferry makes its way into Boston Harbor, Monday, May 12, 2014, for a christening ceremony.

Elise Amendola/AP

The Nova Scotia government confirmed Friday that of the $21-million it has committed over seven years for a new international ferry service, $19-million has already been handed to the American operator.

The surprise announcement from Economic Development Minister Michel Samson came only two weeks after Nova Star Cruises carried its first paying passengers from Portland, Me., to Yarmouth, N.S.

"Unfortunately, with establishing an international ferry service, there have been some challenges along the way," Mr. Samson told reporters. "We've had to adjust …Year 1 is going to be a challenge."

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The minister said total spending jumped to $19-million Thursday when the Liberal government agreed to advance $5-million after the State of Maine failed to deliver on a pledge to deliver a $5-million line of credit to the company.

The province's previous NDP government had already committed $12-million to the ferry service during its first year of operation, Mr. Samson said.

And the succeeding Liberal government agreed to hand over an extra $2-million in February when the company said it had to post a bond required by the U.S. Federal Maritime Commission, he said.

When asked if the province was willing to spend more than the $21-million already set aside, Mr. Samson declined to rule it out.

The minister said the company, based in Portland, is still holding negotiations about financing with state officials. Meanwhile, he said, the company needed the $5-million to cover operating costs, including bills for fuel and supplies. "We felt we had no choice but to advance those funds," the minister said.

Steve Durrell, Nova Star's chief operating officer, said he expects to secure the line of credit before the end of the summer through the Financial Authority of Maine, which is the state's business financing agency.

Mr. Durrell said ticket sales for the ferry service were slow at first but are picking up.

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"We are behind where we anticipated," he said in an interview, adding there was a delay in getting the bond, which kept the company from taking bookings or promoting the service for two months. He said the company has also faced challenges with planning, noting that 60 per cent of bookings are being made less than two weeks from departure dates.

Still, Mr. Durrell said the company experienced an upswing after fares were slashed in May. He declined to release any financial data or passenger figures, but he conceded that the company's 1,200-passenger, Nova Star, has yet to be full.

The 161-metre ferry is scheduled to make daily round-trip crossings until Nov. 2. It was taken out of service between Tuesday and Thursday of this week for a safety refit.

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