The province of Nova Scotia has purchased the Bowater Mersey Paper Company and its assets with the intent of making the forest available for community and Mi’kmaq use, and turning the paper mill into a centre for clean energy, bioenergy and forestry innovation.
Bowater Mersey is the former joint venture between Resolute Forest Products(51%) and The Washington Post Company (49%), formed to hold the Mersey newsprint mill, located in Brooklyn, Nova Scotia, and other associated assets, including private timberlands, the Oakhill sawmill and Brooklyn Power Corporation. Resolute operated the Mersey newsprint mill until it was indefinitely idled in June of 2012.
Bowater Mersey had been the single largest private landowner in Nova Scotia. With this purchase, the government is acquiring 55,000 acres of forest land in southwestern Nova Scotia. The lands have a value of $117 million, according to an independent valuation.
A government release describing the deal with Resolute states that the Bowater Mersey Paper Company was acquired for $1, plus the assumption of certain liabilities. These include a pension shortfall of about $100 million, plus other employee costs ($18.4 million) and payment of a portion of company debt ($18 million).
According the provincial government, the assets involved in the deal have a value of $150.4 million: lands ($117.7 million); Brooklyn Power ($25 million); paper mill site ($5 million); plus fibre inventory, cash and investment tax credits ($2.7 million).
The Brooklyn Power 30-MW biomass generating station will be sold to Emera for $25 million.
Before closing the transaction, Resolute purchased from Bowater Mersey the assets associated with the Oakhill sawmill and certain components of the paper mill, which can no longer be used to make paper. The Nova Scotia government was unwilling to purchase the sawmill, to ensure it remains in compliance with the Softwood Lumber Agreement.
The government statement explaining the deal also notes, “The province could have chosen to expropriate the land, but that process often takes years and can cost considerably more.”