Ernst & Young reveals more NewPage troubles
Documents released Tuesday by Ernst & Young, the court-appointed monitor of the sale of NewPage Port Hawkesbury Corp., revealed a fight brewing with the union over the 1,500-member employee pension plan.
The pension plan is an unfunded $75 million liability. The union wants to control it but Ernst & Young is resisting, it said, because the interests of the current workforce are not necessarily the same as retirees.
In addition, 38,000 tonnes of stud wood, pulp wood and chips have piled up as unused inventory.
Almost half that amount was purchased but never used because of production problems. It was rushed to production after being cut in August and will soon reach the end of its useful life.
After the mill shut down, the newsprint machine had a two-day breakdown and the glossy-print machine shut down for 20 hours and could only be partially operated afterward.
Ernst & Young estimated that six days of production were lost.
NewPage is attempting to have its creditor protection extended into December.
Despite the inherent difficulties, Ernst & Young has received 21 letters of intent from interested buyers. Some want to operate the mill while others want to sell off the assets.
The next stage in the process requires potential buyers to make a $250,000 deposit by a week from Friday. In two weeks, the number of bidders will be narrowed down to two.
The successful bidder will be notified by Nov. 9.
The Nova Scotia Supreme Court will then have to approve the sale.
When the mill closed last month, 1,000 people lost their jobs — 600 in the mill and 400 people who work in the woods. Many others depend on the plant for indirect jobs.
The company owes $156 million to unsecured creditors.
NewPage announced on Aug. 22 that the newsprint machine would shut down on Sept. 10, while the machine that produces glossy paper for magazines was turned off Sept. 16.