Pacific West wants keys to NewPage mill by Aug. 31: monitor
The NewPage paper mill is shown in this file photo.
Published Thursday, July 12, 2012 4:38PM ADT
Last Updated Thursday, July 12, 2012 6:52PM ADT
HALIFAX -- The prospective buyer of a shuttered paper mill in Cape Breton is eager to get the deal wrapped up by Aug. 31 to avoid missing a lucrative season for paper orders, the court-appointed monitor handling the sale said Thursday.
Mathew Harris of Ernst & Young said Vancouver-based Pacific West Commercial Corp. could get the NewPage Port Hawkesbury mill back in operation immediately if all goes as planned.
"Pacific West really needs to get this going by the first of September because it's the key season for placing orders for (supercalendered) paper," Harris said in an interview.
"They're very leery about missing another season ... All the parties are very focused on having the transaction close by that point in time."
In a report released Thursday, the monitor said either side can opt out of the deal if the sale isn't closed by the end of August, but they can also choose to extend the date.
Harris said neither side has indicated it would walk away if the deadline isn't met.
The proposed closing date was first disclosed in an affidavit filed last week in Nova Scotia Supreme Court.
The Point Tupper mill closed last September, throwing some 600 employees out of work and affecting another 400 forestry contractors.
Pacific West has indicated it wants to restart one of two machines at the plant, which remains in a so-called "hot idle" mode.
Harris said a number of obstacles have to be overcome before Pacific West gets the keys to the mill, including obtaining certain business permits.
Another step toward finalizing the sale is approval of a complex partnership agreement between Pacific West and Nova Scotia Power.
Hearings before Nova Scotia's Utility and Review Board into the load-retention tariff application are scheduled for next week.
Under the proposed 7 1/2-year deal, the mill would make a contribution of $2 per megawatt hour to the utility's fixed cost, as well as pay fuel costs while the utility would also receive dividends if the mill is profitable.
In documents filed recently with the board, Pacific West said it won't proceed with the sale if it's required to pay a higher contribution to Nova Scotia Power's fixed cost than proposed in the rate filing.
The monitor's report said there's no time frame for the regulator to issue its decision, but "the parties have done everything possible ... to ensure that a decision is reached as quickly as possible."
The matter returns to court next Tuesday. Creditors will likely vote on a so-called plan of arrangement on Aug. 15, but the court must first approve that date.
"It's effectively an offer to creditors in exchange for what the corporation owes you, this is what we're proposing you take," said Harris.
NewPage will also seek an extension of its creditor protection until Aug. 31.
Harris said a number of matters will have to be dealt with after the sale closes, including giving money to various groups of creditors and finalizing claims.
The affidavit filed last week said that Pacific West is prepared to spend $33 million to buy the mill. If all goes as planned, Pacific West would become the plant's sole shareholder on Aug. 31.
"They'll own the assets," said Harris. "I think all they have to do is push the button and they're back in business."