NewPage granted creditor protection, permission to sell Port Hawkesbury
September 13, 2011 By Pulp & Paper Canada
Justice David MacAdam agreed to NewPage Port Hawkesbury’s proposed restructuring plan on Sep. 9, giving the company permission to use funds from its American parent company to shut down operations this week and proceed with the sale of the Port…
Justice David MacAdam agreed to NewPage Port Hawkesbury’s proposed restructuring plan on Sep. 9, giving the company permission to use funds from its American parent company to shut down operations this week and proceed with the sale of the Port Hawkesbury mill.
In the U.S., NewPage Corp. received permission from the court to continue operations while under Chapter 11 protections, and received interim approval for $600 million of debtor-in-possession financing.
Justice MacAdam reportedly questioned the wisdom of the plan to grant certain current assets of the Port Hawkesbury mill to the parent company in exchange for $25 million, but decided to proceed because otherwise the Canadian operation would not have enough cash to pay employees this week.
The $25 million settlement will keep the Port Hawkesbury mill open in a “hot idle” state for the next 13 weeks, while the company attempts to find a buyer.
NewPage has also agreed to set up a fund to pay forestry contractors, who have not been paid since Aug. 22. The woodsman reserve fund will contain $1.35 million. Without such a fund, the forestry contractors would have opposed NewPage’s creditor protection plan.
The provincial government has stepped in with $15-million investment to keep woodlands workers in the Strait area employed and keep the supply chain to the mill ready for restart.
“By keeping the supply chain operating, we can say to interested buyers: here we have an efficient workforce; here we have one of the best mills in the world; and here in Port Hawkesbury we have a mill in hot idle with a supply chain intact. It’s ready to go without needless delay,” said Premier Dexter.
The seven-point plan includes actions to:
– Expand the province’s silviculture program for 2011 and 2012.
– Stockpile wood for future use in the Strait, to keep harvesters and truckers working. Much of this work will involve creating a stockpile of fuel for the planned Nova Scotia Power biomass co-gen facility under construction.
– Ensure Crown forest roads are maintained in the NewPage Port Hawkesbury harvest area. The province will invest $125,000 per month for the next few months to keep the usual number of road contractors working to maintain NewPage’s road infrastructure.
– Ensure the mill is able to retain a core team of about 20 woodlands staff with the knowledge and ability to facilitate work and training and oversee the appropriate use of Crown land.
– Amend a small business loan program to better address financing concerns for contractors and other small businesses.
– Invest up to $3.5 million and work with the NewPage Port Hawkesbury’s core woodlands team to develop specialized training programs for self-employed workers that will focus on silviculture, sustainable forestry practices, productivity improvements and efficiency of forestry operations.
– Engage a specialist to complete a comprehensive market study for newsprint and the high-gloss paper, which were the products of the Port Hawkesbury mill.
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