Newfoundland and Labrador's natural resources minister warned Friday that Corner Brook Pulp and Paper is in such dire shape that it could shut down without a new deal with its unionized employees.

"I can tell you, based on what we know, [that] Corner Brook and Pulp is on the verge of bankruptcy," Jerome Kennedy told reporters in St. John's Friday.

Kruger Inc. chairman Joseph Kruger flew to St. John's earlier this week to meet Premier Kathy Dunderdale. (CBC )

Kruger Inc., which owns Corner Brook Pulp and Paper, has resumed negotiations with unionized workers, who just weeks ago narrowly rejected a proposal to restructure the unfunded liability of the company's pension plans.

Kennedy, who spoke to reporters on Friday afternoon at Confederation Building, stopped short of prescribing action for Montreal-based Kruger Inc., the parent company, and the Communications, Energy and Paperworkers union, but left no doubt that he sees the stakes in the current talks as very high.

"We want the union and the company if at all possible to negotiate a deal which ensures the long-term sustainability of the mill," Kennedy said.

"You have a situation where we know that there's not enough money coming in to meet the liabilities, and to meet the payments required," said Kennedy, who added, "We also know the union knows."

Kennedy emphasized that his comments about a possible bankruptcy related directly to the subsidiary of Corner Brook Pulp and Paper, rather than the parent company.

Members of the CEP — despite advice from its national staff — voted in May to turn down Kruger's offer that would extend the period for restructuring its unfunded pension liabilities from five years to 10.

The same offer was ratified by pensioners as well as non-union staff.

Soon after, the CEP asked for a new round of negotiations aimed at reaching a deal on pensions.

"The liabilities are enormous, [and] we know there's at least $80 million in unfunded pension liability, and there are monies owed to financial institutions," Kennedy said.

Kruger Inc. chairman Joseph Kruger met Monday evening with Premier Kathy Dunderdale, and said later that he was "very, very concerned" about whether the mill can stay open.

The company has given unionized workers until June 15 to reach an agreement.

Kennedy said Kruger Inc. differs from AbitibiBowater, which shut down a century-old mill in Grand Falls-Windsor in 2009, in substantial ways. He said Kruger has invested substantially in the Corner Brook operation, even though the company "has not made any money for six or seven years."

Minister calls MP 'irresponsible'

Kennedy said he called the scrum with reporters to counter what he repeatedly called "irresponsible" actions by Liberal MP Gerry Byrne, who plans to meet Sunday night with mill workers about the future of Corner Brook Pulp and Paper.

"Mr. Byrne seems to be suggesting that there’s a hidden agenda here," said Kennedy, referring to recent media comments that Byrne has made, as well as an advertisement in Friday's edition of the Western Star.

Kennedy took exception with Byrne's assertion that the government is questioning the viability of the Corner Brook mill.

"I would suggest that the rhetoric be toned down, and the unions be allowed to get on with the collective bargaining process," he said.