B.C. company wins bid to buy NewPage mill

A firm based in British Columbia has been chosen as the successful bidder in the ongoing saga to sell the shuttered NewPage Port Hawkesbury mill.
A firm based in British Columbia has been chosen as the successful bidder for the shuttered NewPage Port Hawkesbury mill. (CBC)

A firm based in British Columbia has been chosen as the successful bidder in the ongoing saga to sell the shuttered NewPage Port Hawkesbury mill.

The winning bid from Pacific West Commercial Corp. was one of four evaluated by NewPage Port Hawkesbury, Ernst & Young and Sanabe & Associates, a New York investment bank.

"Negotiations will now proceed exclusively with Pacific West Commercial Corporation (PWCC) for a going concern purchase of the company's assets," said a news release from Ernst & Young, the court-appointed monitor handling the sale.

"The successful completion of a sale is subject to a number of significant conditions being satisfied as outlined in the PWCC offer. The focus will now shift to satisfying these conditions to facilitate a going concern sale of assets."

The value of Pacific West Commercial Corp.'s bid was not made public. The company is associated with Stern Partners Inc., a Vancouver investment firm that also owns Alberta Newsprint Co. of Whitecourt, Alta., and West Linn Paper Co., an Oregon-based mill.

The NewPage Port Hawkesbury mill was shut down in September after struggling with soaring fuel and electricity costs, a strong Canadian dollar and declining demand. It lost $50 million US over the last year, according to an affidavit NewPage filed with the court.

About 1,000 people were left without work when the operation closed, including 600 employees and approximately 400 forest contractors.

Ron Stern, the president of Stern Partners Inc., told CBC News the mill's newsprint machine will be left idle if the sale is approved. But he said its supercalendered machine will continue making glossy paper for magazines and catalogues.

"We're going through the whole structure of how work is done and trying to come up with the most efficient model — how you can safely and efficiently," Stern said in a telephone interview from Vancouver.

Electricity rates to be discussed

He said he's told the union at the mill that if his company buys the mill, many of the 600 people who used to work there will no longer have jobs.

"Unfortunately, I can tell you that they won't," he said.

Charlie Parker, the provincial Natural Resources Minister, said Pacific West Commercial Corp. will enter into further negotiations with the provincial government, the province's electric utility and the union representing mill workers.

"Our government is very pleased that the successful bidder is one that is looking to keep the mill operating in a sustainable way and will help maintain hundreds of jobs in rural Nova Scotia," he told a news conference on Wednesday.

"We will continue our discussions over the next several weeks with the Stern Group and our discussions will determine the appropriate type of government assistance required to operate this mill for years to come."

In the meantime, the province will spend $5 million to keep the lights on at the mill and ensure the building remains in sellable condition.

Parker said Pacific West Commercial Corp. is already negotiating with Nova Scotia Power Inc. to secure a new deal on electricity rates. The mill is one of the province's largest consumers of electricity.

As well, he said the bidder has to negotiate new leases with the province to gain access to timber on Crown land, and the sale won't be final until a settlement is reached with the union.

Ernst and Young receiver Matt Harris says those are the prerequisites to achieving a sale.

"The significant conditions are around access to the fibre off of Crown land, an acceptable collective agreement and an acceptable energy rate," he told CBC News.

Stern said the company is looking for significant cost savings, but stressed he doesn't want to saddle Nova Scotians with higher electricity bills.

"We're not restarting it and suggesting that … other consumers should be paying more for power than they are with it not operating."

Mayor impressed by Stern Partners

Billy Joe MacLean, the mayor of Port Hawkesbury, said he had spoken with Ron Stern and that he was impressed by the businessman's track record and honesty.

"They took over a mill in Whitecourt, Alta., that has proven very successful. They cut costs, they improved the energy efficiency, they were really well-received by the community and really got involved in the community. It was a real success story," MacLean said Wednesday.

"From the offset, that company really impressed me with their vision for the mill — their innovativeness in terms of some of the plans that they have to cut costs, save money, to be efficient."

MacLean pointed out that the mill, which had been in operation for 50 years, has never been owned by a Canadian company.

"This is the first time we have a Canadian company from Canada that has successfully put forward a bid. So if they are the company that finally takes over — which I'm hoping they will be — it'll be the first time in 50 years."

The mayor said in his discussions with Stern, there was a part of the conversation that stuck in his mind.

"He said, 'We're not here for five or six years. If we have that plan, I don't want to purchase the mill. We want to operate this mill for 15 to 20 years or better. We want to prove that it can be successful, but it has to be efficient.' And those words impressed me because we want them here for the long haul," MacLean said.

Officials from NewPage Port Hawkesbury will appear in court on Jan. 18 to request a sales process extension until March 30.

With files from The Canadian Press