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Port Hawkesbury restart will proceed, despite setbacks to deal


September 18, 2012
By Pulp & Paper Canada

Despite the denial of its request for an advance tax ruling from the Canada Revenue Agency, the buyer of the NewPage Port Hawkesbury mill in Nova Scotia still expects that all required approvals will be in place for a successful restart of…

Despite the denial of its request for an advance tax ruling from the Canada Revenue Agency, the buyer of the NewPage Port Hawkesbury mill in Nova Scotia still expects that all required approvals will be in place for a successful restart of production before the end of September.

Pacific West reports that the process for ramping up to restart is continuing as planned, with 150 people on site.

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It was announced mid-September that Pacific West will not receive the requested advance income tax ruling from CRA. The buyer quickly announced an agreement in principle with the government of Nova Scotia “regarding ways to mitigate the impact of not having the tax ruling, so that the mill can be restarted on a sound financial basis, and without NSPI (Nova Scotia Power) becoming a shareholder.”

Under the complex electricity supply agreement approved in August by the Nova Scotia Utility and Review Board, Nova Scotia Power was to take a 30% ownership stake in the mill, and take payment for electricity as dividends.

Now that the CRA approval is not forthcoming, Pacific West says restarting the mill will require amendments to the existing Review Board approval to reflect the absence of a tax ruling, but the company will not be seeking any concessions with respect to the approved tariff.

The Nova Scotia government, which has poured millions into keeping the mill in a hot idle state and supporting the local forest products sector while NewPage Port Hawkesbury is closed, is reworking its existing support package to accommodate the unfavorable tax ruling.

Natural Resources minister Charlie Parker said: “Here’s what we’ve been able to do: The tax ruling from the federal government, while it isn’t what Pacific West was looking for, will actually mean millions of dollars in tax revenue that the Province of Nova Scotia would not have otherwise collected.
“We are able to use that windfall to create room for Pacific West to earn forgiveness on some of the loan money in the support package already announced.”

Shortly after the CRA announcement, Pacific West also received unfavorable news regarding municipal taxes. The company has been unsuccessful in its bid to break The Nova Scotia Supreme Court rejected a bid by Pacific West Commercial Corp. to cancel a 10-year municipal tax deal that had been initiated by the mill’s former owner, Stora Enso, in 2006. This means the new owner will not be able to negotiate a lower municipal tax rate.


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