The potential purchaser of the idled Port Hawkesbury paper mill has almost worked out an electricity deal and has contacted the union to start labor negotiations, the bankruptcy monitor revealed today.
Extensive negotiations between Pacific West Commercial Corporation and Nova Scotia Power Inc. have been "constructive," and the companies "are working toward finalizing an agreement on the supply of energy to the Company," Ernst & Young said in a report today to a Canadian bankruptcy court. PWCC has said that obtaining favorable electricity rates was a major condition of it buying the mill and restarting its world-class supercalendered paper machine.
PWCC and Ernst & Young believe that the power negotiations "have reached a sufficient level that it is appropriate to seek the implementation of next steps in this proceeding." Those next steps include starting the formal process of identifying creditors, working out an agreement with the province for wood to supply the mill, and labor negotiations with the Communication, Energy, and Paperworkers Union.
When NewPage entered bankruptcy reorganization in August, it essentially set its only Canadian mill adrift and kept its U.S. mills running. The big U.S. paper maker said it was losing $4 million per month on Port Hawkesbury.
But PWCC's parent company, Stern Partners of Vancouver, British Columbia, is well known in the paper industry for taking over money-losing mills and running them profitably, as demonstrated by its success with West Linn Paper Company in Oregon. The CEP has already indicated it would accept pension reductions of at least 30% to help get the mill restarted, and the province is also providing major support.
Earlier today, the mayor of Port Hawkesbury was quoted as saying the community is frustrated with the slow pace and lack of information regarding restarting the mill. The monitor's report indicated it would be many months before the mill could crank up again even if all goes well.