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Buyer of St. Marys Paper would fire workers, not restart paper machine


March 23, 2012
By Pulp & Paper Canada

The receiver for the shuttered St. Marys Paper mill in Sault Ste. Marie, Ont. has been granted court approval to proceed with a sale of assets to 2319839 Ontario Inc. The purchaser is described by the receiver as a consortium of companies,…

The receiver for the shuttered St. Marys Paper mill in Sault Ste. Marie, Ont. has been granted court approval to proceed with a sale of assets to 2319839 Ontario Inc. The purchaser is described by the receiver as a consortium of companies, including an auctioneer, a real estate developer, a forest products company and a metals recycler.

All employees of St. Marys Paper are to be terminated prior to the sale. The purchaser has stated it may try to operate a biomass and co-gen facility, but does not expect to manufacture paper. Any unused assets of the mill are expected to be liquidated.

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St. Marys Paper consists of a groundwood pulp mill and three supercalendered paper machines. The mill has operated sporadically since 2009. It shut down in March 2011, due to mechanical problem on a paper machine, was not restarted due to market weakness. The receiver, Ernst & Young, noted that it had received feedback from several parties during the sales process that it would be not economical to restart the mill given current market conditions for supercalendered paper.

The mill has remained in a cold idle state, and was put into receivership on Dec. 30, 2011. When fully operational, it employed about 300 people.

The mill wood yard is subject to lien in favor of Ministry of Natural Resources, and is excluded from the purchase agreement.

Ernst & Young, in its latest report to the court, explained that nine parties submitted bids. Three were from demolition firms, three from auctioneers, and three from parties interested in operating certain aspects of the mill or redeveloping it into a biomass operation. The winning bid was none of the above.

Ernst & Young also noted that none of the bids would provide sufficient proceeds to cover the debt of the mill’s primary secured creditor, International Forest Products. That debt is estimated in the media to be about $7 million.


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