It looks like Bixi Toronto could be in big, big trouble.
A report going before the mayor’s executive committee next week says the company has “an unsupportable debt load” and is struggling to repay a $4.5-million starter loan guaranteed by the city. An attachment to the report recommends “restructuring the city’s relationship with BIXI” in order to “protect the city’s financial interest.”
While the attachment will stay confidential until after it goes to a council vote, Public Works chair Denzil Minnan-Wong says it’s his understanding Bixi’s parent company wants to shut down its Toronto operation.
“My understanding is there’s a larger Bixi organization, and that Bixi organization doesn’t want to keep the Toronto piece,” said Councillor Minnan-Wong, who championed the public bike-sharing venture when it launched May 2011.
Bixi Toronto is owned by Montreal-based PBSC Urban Solutions. A spokesperson for the company did not immediately return a request for comment.
But Marie-Hélène Houle of Bixi Toronto said she has no knowledge of PBSC wanting to get rid of the city’s bikeshare program.
“For now I don’t have any information about any closing of Bixi Toronto,” Houle said.
Asked about the company’s financial troubles, Houle declined to comment because Bixi Toronto’s 2012 annual report has not yet been published.
The city report notes that despite its financial woes, Bixi Toronto has proved popular in its two years of operation.
“From an operational perspective the BIXI public bicycle program has been very successful,” the report says. “In a very short time it has become an important part of the transportation mix in the downtown area with 4,630 paid subscribers and more than 1.3 million bicycle trips generated since the program launched. BIXI is also a key component of the transportation plan being developed for the Pan Am Games.”
But with all of its assets financed through debt, and seasonal cash flow shortages in the winter months when only the hardiest riders take to the saddle, it’s under increasing pressure. As of December 31, 2012 the company’s remaining balance on its $4.5-million loan was $3.9 million.
“I’m disappointed that Bixi isn’t as successful financially as we thought it would be. It’s being adopted by many people, but it’s not meeting its financial targets and council was hoping that it would,” said Minnan-Wong.
“I think that it’s a caution to members of council before we give these loan guarantees that there are consequences to this.”
