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N.S. To Invest $14.8 Million More To Keep Newpage Idling
PORT HAWKESBURY — With $14.8 million Friday, Premier Darrell Dexter bought the Strait area more time. Union, civic and woods industry leaders anxiously awaiting confirmation of a sale and operating agreement for the former NewPage pulp and paper mill in Point Tupper breathed a collective sigh of relief upon hearing the premier’s announcement. The money includes $5.8 million to keep the plant in a hot-idle state until September and $9 million to continue buying and stockpiling wood from contractors who supply the financially insolvent mill. In total, the province has now chipped in $27.3 million since last fall to keep the plant sale-ready and protect its wood supply while negotiations continue with potential buyer Pacific West Commercial Corp, an affiliate of Stern Partners Inc. of Vancouver. When asked whether the province may be throwing good money after bad, Dexter said the alternative would be to see the plant torn down and trucked to some other jurisdiction, denuding northern Nova Scotia of hundreds of direct jobs and hundreds of millions of dollars of annual economic activity. “Although negotiations with Stern (Partners) are taking longer than hoped, I am optimistic that we will secure a deal that will see the mill back in business in this community and sustainable for years to come,” Dexter told community members gathered at the Port Hawkesbury Civic Centre.
The province will also allow the mill to access another $10 million from a May 2006 agreement it had with former operator Stora Enso, compensating the company for not being able to provide a previously agreed upon amount of wood fibre from Crown land.For the owner of Delaney and Son Pulpwood Ltd. near Cheticamp, Friday’s announcement meant he can call five employees working in Western Canada and offer them employment back home once the logging roads open this spring. “If they had not announced this, more workers would have gone because of the uncertainty,” said Paul Delaney, who employs 17 people in his logging operation. “It must mean that they are getting somewhere close to striking a deal with the Stern group.” Stern Partners remains in negotiations with the union representing most of the plant’s roughly 600 workers and is also talking with the province about other possible subsidies and access to fibre on Crown land, and with Nova Scotia Power regarding energy rates. A Stern spokesperson declined to comment while talks are ongoing. On Tuesday, Stern Partners notified the provincial Utility and Review Board that it will be seeking a reduced power rate through negotiations with Nova Scotia Power.
For at least one of the mill’s employees, none of the developments have changed his plans to head west for work. The man, in his late 40s, spoke on condition of anonymity. “I have 30-plus years in there, and the way it is now, there’s not much of my pension left,” he said. “I don’t blame Stern (Partners) for not wanting to take over the pension shortfall, they’re not responsible for it. But if I want to retire at 58, while I still got some health left, I’m going to have to go to Alberta and work.” The man said the underfunded pension plan has been paying out to its retired members throughout the shutdown but very little money has been put back in. He estimated his pension is now about 40 per cent underfunded. Archie MacLachlan, vice-president of Local 972 of the Communications, Energy and Paperworkers Union, which represents most of the plant’s workforce, welcomed the announced funding. He declined to comment on whether concessions in pay or benefits are being offered or if Stern is seeking them. Stern has expressed interest in operating only the newer supercalendered paper machine at the mill. It is expected that employment would be less than half of what it was, but harvesting operations could remain fairly stable. A large percentage of the mill’s wood fibre used to be brought in from outside the province.
According to documents in NewPage Port Hawkesbury’s creditor protection filing before the mill was idled last September, the company employed about 600 people in the plant and 400 through its woods operations, and it directly contributed over $200 million a year to the Nova Scotia economy. Two weeks ago, court-appointed monitor Mathew Harris, managing partner of Ernst & Young in Halifax, said claims against the former mill operator are much higher than originally estimated, with guarantor claimants owed almost $3 billion, pension deficiencies of roughly $140 million and unsecured creditors owed about $20 million.
http://thechronicleherald.ca/business/74398-ns-invest-148-million-more-keep-newpage-idling
Viridis buys closed Upper Musquodoboit mill
Viridis Energy Inc. has completed its purchase of the assets of the Enligna wood pellet mill in Upper Musquodoboit. Enligna Canada went into receivership last August owing Nova Scotia taxpayers $ 2.7 million. Fifty people lost their jobs. Vancouver-based Viridis said Monday it bought 20 buildings on four properties with a total of 157 acres and a separate 22-acre wood lot. The facilities house five pellet presses. Enligna took over the mill from MacTara Ltd. It was the largest wood pellet manufacturer in Atlantic Canada with the capacity to produce 110,000 tonnes of wood pellets annually. Viridis said it has created a subsidiary — 3260526 NS Limited — to handle the purchase, which will be financed through a $2.5-million short-term loan.
http://www.cbc.ca/news/canada/nova-scotia/story/2012/02/07/ns-viridis-wood-pellet.html
N.S. POWER GIVEN RIGHTS TO CROWN WOOD
BIOMASS PLANT WILL OPERATE EVEN IF NEWPAGE FAILS
A critic of Nova Scotia Power's biomass plant under construction in Point Tupper said the utility has been given the right to harvest 175,000 tonnes of biomass on Crown land if the NewPage mill goes out of business.
Neal Livingston, a small hydro producer and an environmentalist, said most ratepayers don't realize that if NewPage goes out of business, the province has agreed to give Nova Scotia Power access to the wood needed for the plant.
"Well, it's like a corporate takeover. They have been given first dibs on a million acres of Crown land and NSP is effectively in the controlling position," he said.
Nova Scotia Power has said it intends to finish the $200-million biomass plant, even if the NewPage pulp and paper mill shuts down permanently.
Livingston said the power utility has no experience in forestry, but his strongest criticism is reserved for the government's decision to handover a big chunk of the province's wood supply with no public discussion.
"This should be a complete scandal that the government gave them this right to Crown land," he said.
"I mean, anybody who would want to buy NewPage is suddenly buying them without their biomass supply and without the ability to generate their own power if they want to do that. So, effectively, it's a much diminished asset."
A Natural Resources Department spokesman said the province has agreed to supply wood from its Crown land to keep the mill's boiler running if it does cease operations.
Premier Darrell Dexter said the province is working with NewPage to try and ensure the mill stays in business.
Late Tuesday, Dexter confirmed the company has filed for bankruptcy.
The biomass plant is being built to meet new provincial rules that say 25 per cent of the province's electricity must come from renewable sources by 2015.
http://www.cbc.ca/news/canada/nova-scotia/story/2011/09/07/ns-biomass-nova-scotia-power.html
NewPage mired in red ink
Papermaker’s debt raised as major concern at URB hearing
NewPage Corp., the Ohio company that owns the pulp mill NewPage Port Hawkesbury, lost $174 million in the second quarter of its financial year, despite an increase in sales.
The parent company, which has undergone a major shakeup of its top executives, reported having $7 million in cash and $113 million available on a line of credit. But it also has a debt of $3.4 billion.
NewPage Port Hawkesbury is a partner with Nova Scotia Power in a controversial $208-million power-generating plant proposed for nearby Point Tupper that would make electricity by burning wood waste in an old burner valued at $80 million.
Last month, a U.S. debt-research firm issued two reports showing heightened concern about the parent NewPage Corp.
CreditSights Inc. of New York said NewPage, the coated-paper manufacturer owned by private investment firm Cerberus Capital Management LP, was looking "increasingly toxic" and investors should avoid NewPage securities, observing that the market was "starting to price in the risk of potential default on the company’s cash coupons," due in the fourth quarter.
In another report, CreditSights said NewPage had "a very thin liquidity cushion, and 2011 may prove fatal."
Last week, NewPage announced that Chan Galbato had been elected its new chairman. Galbato, a former Home Depot and General Electric executive, was more recently owner of CWG Hillside Investments LLC, a consulting business that NewPage said provides operational and strategic turnaround expertise.
The new financial information came to light Thursday in evidence presented by U.S. utility experts hired by the Nova Scotia Utility and Review Board, reviewing the biomass project proposed for Point Tupper.
"As our earlier evidence stated, NewPage’s financial condition was already troubling," wrote John Antonouk and Richard Mazzini of Liberty Consulting in California.
Liberty said the biomass project has too many "significant risks" to Nova Scotia Power customers and too many unanswered questions. It said the review board should reject the proposal.
Liberty also said it continues to be "troubled" by the Point Tupper paper mill’s competitiveness, hurt by the comparative weakness of the U.S. dollar.
The review board hearing on the biomass project resumed Thursday. Board chairman Peter Gurnham had adjourned it in late July because he wanted to review two other alternative energy projects that Nova Scotia Power solicited.
Nova Scotia Power wants the review board to approve the biomass project to help it meet the province’s targets for producing electricity from renewable sources. The utility would like to get the plant up and running by 2012, but the board rejected a similar proposal last summer.
Gurnham has reserved his decision.
NewPage filed documents with the board Thursday to counter the Liberty evidence. The reason for NewPage’s poor performance in the first half of 2010 was blacked out for confidentiality reasons. The company argued that the CreditSights reports gave "inaccurate" indications of its future direction, but the rest of that sentence was also blacked out.
"In short, NewPage believes the cyclical fine printing and publications paper industry has rebounded from the deep trough of 2009 and early 2010," NewPage said in a brief to the board.
NewPage also addressed its management upheaval, saying "the collective changes gave NewPage a real opportunity to reshape the executive team. . . . This should be viewed as a positive development."
The company said its future is not as bleak as some would think.
"While we appreciate Liberty’s concerns about the company’s performance in the first half of 2010, NewPage believes the industry has improved and the company in particular has positioned itself for the future and will continue to improve operations as much as possible," it said.
Port Hawkesbury Mayor Billy Joe MacLean said in a telephone interview Thursday that he wasn’t surprised to learn that NewPage is losing a lot of money.
"I think they’ve been in survival mode now for two or three years," he said.
MacLean said he had heard news of the company’s massive debt and the possibility that it might seek protection from creditors. And he said employees of the NewPage Port Hawkesbury paper mill have read the articles and heard about the debt, and they know the reality of the market, the price of paper and production costs.
The cost of electricity is also having "a deadly impact on the mill," MacLean said.
He said pulp mills are closing all over the country, and "we’re one of those ones like (the AbitibiBowater plant in) Liverpool hanging on by our fingernails and we’re praying to God that we’ll survive."
If the Point Tupper mill closes, MacLean said, it would erase 400 jobs at the mill and would also affect truckers, woodland operators and small woodlot owners.
"I would suggest to you that (for each one of) those 400, everyone at the mill proper, there would be seven (jobs lost) off-site," the mayor said.
( jmyrden@herald.ca)
http://thechronicleherald.ca/Front/1201069.html
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