$110M loan finalized for Corner Brook mill
Newfoundland and Labrador Premier Tom Marshall finalized a $110-million loan agreement with Corner Brook Pulp and Paper on Thursday.
Of the total loan, $85-million will be released right away to refinance existing debt and working capital.
The provincial government also signed a power assets and water rights purchase agreement with the company.
"Our government’s investment of $110 million supports the sustainability of Corner Brook Pulp and Paper Limited, and helps secure the future of our forest industry for the benefit of the residents and communities of our western region and our entire province," Marshall said in a release sent out on Thursday.
Kruger Inc., the parent company of Corner Brook Pulp and Paper, secured the deal by mortgaging company assets, including the Deer Lake Power Plant and Watson's Brook Power Plant.
Daniel Archambault, a vice president at Kruger, said the news was good, but that there was still work ahead.
"This loan will enable Corner Brook Pulp and Paper to carry out capital projects that will reduce costs, improve productivity and, ultimately, increase the mill's competitiveness on the global newsprint market," Archambault.
The 2013 budget included a provision for a $90-million loan to the Kruger Inc.-owned newsprint mill.
Last fall, however, the government said the full amount of its commitment would be $110 million over more than one fiscal year.
The final detail for the agreement hinged on Corner Brook Pulp and Paper, which has been struggling amid a global slump in demand for newsprint, reaching agreements with all of its unions.
With files from CBC's Jeremy Eaton and Colleen Connors