NewPage Port Hawkesbury mill to be sold
Operating losses of $50 million in last year
According to an affidavit filed by mill manager Tor Suther in support of a credit protection application, New Page has already contracted a New York company to search for a buyer for the plant.
Suther said a target list of companies that may be interested has already been developed and potential purchasers approached. The records indicate at least one interested party has already toured the site.
NewPage hopes to choose qualified companies by Sept. 30 and select a successful bidder by Nov. 9.
NewPage Port Hawkesbury Corp. mill filed for creditor protection Tuesday after losing $50 million over the past year, according to court documents.
The application filed with the Nova Scotia Supreme Court says the Cape Breton mill is in "dire financial straits" and needs immediate protection from creditors.
Suther said the Point Tupper mill had been "suffering significant operating losses," most recently about $4 million per month on average.
He said that operating losses to date had been funded by Ohio-based parent company, NewPage Corp., which totals $50 million over the past 12 months. The parent company is unable to continue funding the mill; it has $3 billion in debt.
NewPage Port Hawkesbury is looking to sell the mill as a "going concern."
The mill has been working with New York investment firm Sanabe & Associates LLC and has "devised comprehensive sales strategy as regards its business and assets" which has been submitted to the court for approval.
The documents state that in the near term, the mill is "unable to satisfy its required pension plan funding obligations" as a result of the financial crisis.
Without creditor protection, the mill also won't be able be meet "significant financial applications in the short term including utility accounts, raw material expenditures and payroll," the documents say.
Province will look for buyer
The bankruptcy application will be heard on Friday.
"Our advice to them with respect to NewPage was that, with respect to the plant in Port Hawkesbury, was that this was a valuable asset in the the NewPage chain and that they needed to find a way to be able to preserve that throughout any creditor protection and put themselves in a position to be able to find, if they can't do it themselves, to find a new owner for it," he said Wednesday.
Dexter said the province will need to work with all levels of government and the private sector to help identify a potential buyer for the Port Hawkesbury mill to ensure its future in the province.
"The province has already reached out to potential buyers and will now aggressively work with our partners to attract a new buyer as quickly as possible," he said.
The mill closure will affect 400 people who work in the woods and 600 people in the mill. Many others depend on the plant for indirect jobs.
Dexter said he will announce details of a plan to help the woodland contractors Friday in Port Hawkesbury.
"Now that efforts will need to be focused on identifying a new buyer for the mill, it is more important than ever to keep the woodland infrastructure in place and contractors working," he said.
"This will help make the sale of the mill more attractive to potential buyers."
Nova Scotia's official Opposition shares the premier's optimism that the NewPage plant can be sold.
Liberal MLA Michel Samson, who represents the riding of Richmond where the mill is located, said the biggest fear is the mill will be dismantled and sold off.
"Right now what we have in the Strait area at Point Tupper is a Cadillac. It is the best mill there is in North America in the production of supercalendar paper and in the production of newsprint. It is the most efficient. It produces the best quality. We have a Cadillac there," he said.
"That's the message that needs to go out ... not only because of the equipment but because of the workforce and because of the management that exists there. So we have a great asset there that we're trying to put up for sale," Samson said.
NewPage announced on Aug. 22 that the newsprint machine will shut down on Sept. 10, while the machine that produces glossy paper for magazines will be turned off Sept. 16.
The pulp and paper mill has been the major employer in the Port Hawkesbury area since the 1960s. It was sold to NewPage Corp. in 2007.
NewPage is the largest glossy paper manufacturer in North America, with $3.6 billion in 2010 sales and plants in six states as well as Nova Scotia.