Province 'disappointed' Atlantic Lottery GeoSweep investment failed

There was reaction in the P.E.I. Legislature to Atlantic Lottery Corporation's announcement Friday that it plans to write down its $8.7M investment in Geonomics.

P.E.I. and New Brunswick each invested just over $4 million in the U.K.-based companywhich created the geography-based online game GeoSweep.

ALC says as part of its year-end financial processes, it completed an assessment and determined that a writedown was warranted.

"At March 31st, 2015, we determined there was no accounting value of this investment on our balance sheet and so whether there will be value in the future remains to be seen because we still hold our shares. It's a going concern company," said Patrick Daigle, ALC CFO at a news conference.

• Atlantic Lottery gives up on $8.7M GeoSweep gamble

According to ALC, today's announcement means P.E.I. now owesAtlantic Lottery4.3 million dollarsbecause the province never did pay for the shares.ALC says it willbe up to the province to come up with terms to repay that debt, with the money coming from P.E.I.'sportion of future lottery profits.Until thenP.E.I. is also on the hook for ongoing interest payments.

"We are as disappointed as all Islanders that Atlantic Lottery will write down this investment as a loss on its books. Going forward our new government will take a prudent approach to economic development," said P.E.I. Finance Minister Allen Roach speaking in the legislature Friday.

Opposition Leader Steven Myers responded, "This government and current members of this cabinet who sat around and the table and let that happen should be ashamed of themselves because this is taxpayers' dollars. We can't afford to have our taxpayers dollars gambled."

Brent Scrimshaw, the lottery corporation's president and chief, says Geonomics was a calculated decision made knowing it brought both opportunity and risk.

In a statement released Friday morning, he says the corporation knows that $8.7M is "a lot of money" and is disappointed that the investment "has not performed as we expected."

Scrimshaw says ALC will have to evolve, "particularly in the online world. We will need to take measured risks."

Atlantic Lottery made the investment in Geonomics in 2011.

In February, ALC told the P.E.I. Lotteries Commission that the value of the province's investment in Geonomics had dropped by an estimated $535,096. It was the first timea drop in the value of the investment had been recorded. However, then-finance minister Wes Sheridan said it wasn't the time to get out of the investment.