Financial troubles could put BIXI Toronto in jeopardy
Things aren't looking too good for Toronto's BIXI bikes. A city report released today says the program is experiencing financial difficulties related to the repayment of a loan to buy its bicycles, bike stands, and other equipment.
Though the city says the scheme has been "very successful," attracting 4,630 paid subscribers and more than 1.3 million bicycle trips since 2010, the parent company PBSC Urban Solutions seems to be struggling to generate income during cold winter months.
When it started, the City of Toronto provided a 10-year, $4.8 million term loan to BIXI for the purchase of equipment. As of December 31, the balance of the loan was $3.9 million. The report says the troubles are related to an "unsupportable debt load" and a "seasonal cash flow shortage."
A confidential attachment to the report details ways the city could alter its arrangement with BIXI to best protect its assets in the event the company is unable to repay its debt.
The Montreal-based company is currently in the process of selling its New York City, Melbourne, and Boston contracts as part of an agreement with the city and Quebec government. The City of Montreal loaned BIXI $37 million in 2011 and extended $71 million more in loan guarantees and credit lines.
It's not clear at this stage whether the problems are serious enough for BIXI to close its Toronto operations. A representative for the company said more financial data will be available later and that there is no information on a possible closure. In a scrum, Councillor Denzil Minnan-Wong said it's his understanding the company wants to quit Toronto.
The details of the financial restructuring will be made public before the April 23 meeting of the executive committee. A staff report is due June 19 on the status of BIXI in Toronto.
Should the city try to support its BIXI bikes or should the parent company sort out its own problems related to the original deal?
Chris Bateman is a staff writer at blogTO. Follow him on Twitter at @chrisbateman.