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Northern Pulp update: Paper Excellence reaches settlement with Nova Scotia government

May 23, 2024  By P&PC Staff


Paper Excellence Canada has reached a settlement with the Province of Nova Scotia that acknowledges plans to transform and reopen Northern Pulp Nova Scotia in Pictou will not proceed. The settlement provides for a review process agreed between the Northern Pulp group and the Province of Nova Scotia aimed at determining whether a new, modern mill in Nova Scotia is viable. The agreement also provides for the settlement of outstanding litigation and loans between the two parties and fully addresses the pensions of former mill employees.

The settlement agreement is subject to approval by the Supreme Court of British Columbia.

Feasibility study for a new, modern mill

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As part of the settlement agreement, the Northern Pulp group and the Province of Nova Scotia are creating a review process that will explore the feasibility of a new, modern mill in Liverpool, Nova Scotia.

Paper Excellence Canada will fund this review process and work in close consultation with the Province of Nova Scotia in undertaking a feasibility study to determine whether a viable business case exists to open a new mill there.

The potential construction of a state-of-the-art Northern Bleached Softwood Kraft (NBSK) pulp mill, therefore, depends on a determination of viability under this study.

If a new mill is viable, the Northern Pulp group will reportedly seek third-party project financing to design, construct, and operate it. Northern Pulp will also pay the province $15 million to fully resolve previous woodlands-related debt and will continue to own the woodlands.

If a new mill is not feasible, the Northern Pulp group’s assets in Nova Scotia will be sold in a managed process. The proceeds from the sale will be used to repay the debtor-in-possession financing incurred throughout Northern Pulp’s CCAA process, fund and wind-up pension plans and contribute to cleanup costs. Any funds remaining will go to the province to repay the debts owed to it.

Pictou site to be maintained for potential logistics operations
Paper Excellence’s plans to transform and reopen Northern Pulp Nova Scotia will not proceed. Instead, the focus will shift to maintaining the site for potential future woodland logistics operations, conditional upon establishing a new mill elsewhere in Nova Scotia.

The company shares that the Pictou site will remain in cold hibernation during the feasibility study. Northern Pulp Nova Scotia will continue to comply with its obligations under the existing ministerial order, environmental laws, and regulations and provide ongoing care and maintenance of the site.

Northern Pulp Nova Scotia will remain in CCAA for as long as necessary to achieve the settlement’s objectives.

Regardless of the feasibility study results, outstanding pensions of current and former Northern Pulp Nova Scotia employees will be fully funded, and pension obligations will be fully discharged. Northern Pulp employees and retirees have been the heart of the mill since it opened, and this agreement ensures their pensions are funded, and the plans are wound up.

To resolve all outstanding legal claims, Paper Excellence will withdraw its lawsuit against the province and settle debts under the terms of the settlement agreement. This resolution clears the path for a collaborative future between Paper Excellence and the Province of Nova Scotia.

Paper Excellence states that it knows there are historical community and First Nations concerns related to the Pictou mill’s operations. The company values its relationships with community members, First Nations, and stakeholders. Through transparency, dialogue, and collaboration, Paper Excellence aims to build trust and foster a positive impact on the communities it serves.

The request for approval of the settlement agreement will be heard in the British Columbia Supreme Court on May 31, 2024. Documents related to the agreement were filed on May 22, 2024.


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