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Qubec court confirms termination of SFK Pulp’s supply agreements by Abitibi

The Québec Superior Court has confirmed the unilateral termination of SFK Pulp’s fibre and bark supply agree…

The Québec Superior Court has confirmed the unilateral termination of SFK Pulp’s fibre and bark supply agreements by Abitibi-Consolidated Company of Canada on April 24, 2009.

According to SFK Pulp, the decision releases Abitibi from its contractual obligations taken at the time of SFK Pulp’s creation in 2002 to fulfill substantially all of SFK Pulp’s fibre and bark requirements at the Saint -Félicien mill for a period of 20 years.

“We intend to continue our discussions with Abitibi to establish a fair price for black spruce and jack pine wood chips. During ongoing negotiations between the parties, Abitibi offered a minimum of 500,000 metric tonnes/year of wood chips and an adequate volume of bark to SFK Pulp. We are also firming up our business opportunities with other wood chi p suppliers that are not already under contract with Abitibi,” reports Pierre Gabriel Côté, president and CEO of SFK Pulp.

Under the fibre supply agreement, Abitibi was required to supply certain wood fibre volumes pursuant to a price formula which was meant to increase or decrease the price of wood fibre purchased by SFK Pulp based on the price of NBSK pulp. At the time of termination of the agreement, based on this formula, SFK Pulp was benefiting from a discount of 20$ per tonne.

Côté says there is sufficient volume of wood chips available to supply the Saint-Félicien mill in the future. The company’s two U.S. RBK pulp mills are not affected by this decision.

“We are also currently reviewing with our legal advisors the decision of the Superior Court in order to determine whether or not we have reasonable grounds of appeal,” he adds.

SFK Pulp produces and markets premium virgin and recycled kraft pulp, and operates three mills in Saint-Félicien, Québec, Fairmont, West Virginia, and Menominee, Michigan.