HALIFAX - Nova Scotia's premier isn't tipping his hand on whether there is anything the province can do to prevent a potential buyer from stripping the assets of the financially troubled NewPage paper mill.
Any government threats ahead of a potential sale of the Cape Breton operation would hurt more than help, Darrell Dexter said Thursday.
"If you really want to drive buyers away, then start making threats really early about what you're going to do before they come in and undertake activities," said Dexter. "It's not a responsible or reasonable position for a government to take."
He said the province will work with a new owner to find ways to run the mill profitably, although he wouldn't say what was being contemplated.
Dexter said the government isn't considering an equity stake in any future operation.
"The important thing for us (the government) is that this mill remain resale ready so that we can convince a new operator to come in and operate that asset ... and work with them so that they can do it profitably and over the long-term as opposed to the short-term."
NewPage is scheduled to appear in the Supreme Court of Nova Scotia in Halifax on Friday to seek protection from its creditors.
The mill wants the court to approve 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 parent company would give the mill US$25 million to help it complete remaining work and maintain equipment during a phased-in shutdown that's slated to begin Saturday for the first of its two papermaking machines. The money would also help fund legal proceedings and assist with the search for a buyer.
Court documents filed Wednesday say the U.S.-based parent company has been trying since April to sell the paper mill that lost US$50 million over the last year.
Paul Quinn, a paper and forest products analyst with RBC Capital Markets in Vancouver, said it could be telling that NewPage couldn't get an agreement with potential buyers before seeking court protection from its creditors.
He said it is a difficult environment for a mill struggling against a high Canadian dollar when it primarily sells paper to the U.S. market.
The mill makes supercalender paper, an uncoated product generally used in advertising, which is something companies cut back on in challenging economic conditions, Quinn said.
"It's a difficult one (a sale)," he added.
"Any buyer would be taking a look at the Canadian dollar going forward and expecting it to rise over time given the difference in the economies between Canada and the U.S."
Dexter is scheduled to make an announcement on Friday in Port Hawkesbury on details of a government plan aimed at assisting the mill's wood suppliers during its shutdown.
