HALIFAX - Court documents show NewPage has been trying since April to sell a Cape Breton paper mill that lost US$50 million in the last year.

In an affidavit filed Wednesday as NewPage seeks protection from its creditors in the Supreme Court of Nova Scotia, mill manager Tor Suther says the Ohio-based company enlisted the services of an investment bank with expertise in the forestry sector to search for potential purchasers.

He says the New York-based Sanabe & Associates has since developed a list of possible buyers for the Point Tupper mill -- which is scheduled to close later this month -- and has participated in discussions and co-ordinated site visits with "certain targeted parties."

A proposed schedule in the affidavit shows NewPage is aiming to select one or two bidders by Oct. 18 and close the transaction by Nov. 24. The process would require court approval.

The mill will seek court approval Friday in Halifax of a settlement and transition agreement with its parent company, which is also seeking protection from creditors in the United States in a federal bankruptcy court in Delaware.

Under the agreement, the privately-held parent company would give the mill US$25 million to help it complete remaining work, maintain equipment during the shutdown, fund legal proceedings and assist with the search for a buyer.

Suther said without the agreement, the mill, which he said has been losing about $4 million a month, would have no choice but to file for bankruptcy and liquidate its assets.

"(NewPage Port Hawkesbury) is insolvent and does not have sufficient working capital in the coming weeks to meet its obligations as they fall due," he said in the affidavit.

The affidavit includes a Sept. 2 letter from Nova Scotia Power demanding immediate payment of the mill's August electricity bill, which totalled $9.8 million.

The mill, which opened in 1962, is scheduled to indefinitely shut down its papermaking machines in phases on Saturday and Sept. 16.

A closure would lay off about 1,000 workers. That includes 550 people who work at the mill and 50 who work for the company's woodlands operation. Another 400 forestry contractors feed the mill with pulp wood.

Nova Scotia Premier Darrell Dexter said Wednesday that a government delegation met with NewPage executives in Ohio last week to discuss the future of the Point Tupper mill, which employs about 1,000 workers.

"Our advice to them was that this mill is a valuable asset in the NewPage chain and they need to find a way to preserve that through any creditor protection," said Dexter.

"And if they can't do that, then find a new owner."

He said NewPage should not consider selling off the plant in pieces, but stopped short of saying what his government would or could do if that were to unfold.

"I'm not going to speculate about that. It's not productive," said the NDP premier. "We're focusing on insuring that the mill is an operating facility."

Opposition Liberal member Michel Samson said he was glad to hear that the government met with NewPage officials. But he said the government needed to do more.

"The assets need to be protected. The last thing we want to see is that NewPage is going to sell off the equipment piece by piece," he said.

"Government also needs to send a clear message that the lease on Crown lands is not up for sale by NewPage, that that belongs to the province of Nova Scotia."

Conservative Leader Jamie Baillie said any plan to save the mill must reduce power rates.

In a statement Wednesday, NewPage CEO George F. Martin said he expected the company would continue to operate its U.S.-based holdings through a court-supervised restructuring.

The company, which also employs more than 6,900 people in the U.S., makes coated paper used in magazines and catalogues, as well as uncoated and specialty paper.

NewPage has been hurt by rising raw material costs and plunging demand. At the end of last year, the company reported more than $3 billion in debts, and a net loss of $656 million for 2010 with $3.6 billion in net sales for the year.