Monday, February 27, 2012

A Glimmer of Hope for the Port Hawkesbury Mill

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.

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Anonymous said...

Local sources have indicated that PM2 will be restarted first with approx 250 employee's returning. It is expected with PWCC experience that the PM1 can be produce newsprint at a profit. (Locals are adamant that Port Hawksbury newsprint was unfairly priced to ensure that PM1 did not compete against the New Page US mills). The only stumbling block remains getting a decent enough wage structure to attract the required skills back to the mill vs going out west for oil wages.

Anonymous said...

This last posting has it backwards. First of all , Newpage has no newsprint or hi brite mills in the U.S. Secondly, claims were publicly made that the SC of off PM 2 was over priced to protect Duluth (sc machine) as well as #5 coated machines at various locations. Duluth was the mill that receivied the orders when PH was closed. What is not debatable is that PH was the best quality SC in North America, and Newpage got a lot a guff about delivering Duluth sheet to someone who was accustomed to getting PH. Newpage is a screwed up company that sublet PM1 to a US broker, instead of selling it themselves for a better mill net.

Anonymous said...

The last post is correct for the most part, but wrong on some specifics. Both PH and Duluth were "best in class" SC sheets in separate categories. Duluth makes and great roto sheet, but a mediocre offset sheet; PH made a great offset sheet, but a mediocre roto sheet. NewPage definitely protected the No. 5 CGW mills from PH because the exchange rate was killing them at PH and the coated mills could make more money. If the CAD ever gets back to $1.20 or better PH will be in Fat City.