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Fort St. James deal OK’d; Mackenzie’s fate uncertain |
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Written by GORDON HOEKSTRA
Citizen staff
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Tuesday, 08 July 2008 |
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FORESTS MINISTER PAT BELLPRINCE GEORGE NORTH MLASUPREME COURTRICK BERRY
The future of Pope and Talbot's sawmill in Fort St. James became clearer on Monday, but the future remains in question for the bankrupt company's pulp mill in Mackenzie.
A B.C. Supreme Court ruling on Monday gave approval to forestry firm Conifex Inc. to buy the Fort St. James sawmill.
Conifex said it plans to have the mill -- which has been down since mid-October, putting 280 workers off the jobs -- fully operating by next month. The company, started by a number of forestry and investment banking executives, said it is paying $12.8 million for the mill, more than twice the $6 million for an earlier deal that collapsed.
Conifex -- headed by president Ken Shields, a former Slocan director and chairman of Raymond James investment company -- had made a failed $285-million bid earlier this year to purchase Domtar's forest products division in Quebec and Ontario.
United Steelworkers local 1-424 president Frank Everitt said the union, which represents the workers at the mill, support the Conifex purchase. "I certainly think it's a good thing for the community of Fort St. James, and it's good for our members, to be able to know they are returning to work," said Everitt.
"As I understand it, they are shooting (to start) in August -- it's been a long time coming," said Everitt.
The union official said they hope to meet with Conifex today when the new owners visit Fort st. James, 160 kilometers northwest of Prince George.
Financially-troubled Portland, Ore.-based Pope and Talbot -- which had been hit hard by tumbling lumber markets and a high debt load -- went into bankruptcy proceedings late last year.
Earlier a deal was reached with PT Pindo Deli to purchase the Fort St. James sawmill for $6 million and the Mackenzie and Nanaimo pulp mills for $105.3 million. But PT Pindo Deli, a subsidiary of Indonesian-based Asia Pulp and Paper, withdrew from the pulp mill deals. While the company maintained the sawmill deal was valid, the court decided PT Pindo had failed to meet a deadline.
In court Monday, the company said it would pay $16.1 million for the Fort St. James sawmill but the receiver, PricewaterhouseCoopers, said it was suspicious of the company's ability to close the deal given its history.
According to documents posted on Pope and Talbot's bankruptcy website, the court was expected to hear other recommendations from the receiver: a permanent closure and breakup of the Harmac pulp mill in Nanaimo and a further step in shutting down the Mackenzie pulp mill. However, a decision to permanently close the Nanaimo pulp mill was delayed after a group of employees put forward an improved bid backed by more investors.
The receiver is also recommending the Mackenzie pulp mill be more permanently shut down, which the receive acknowledged would reduce the the mill's value given the expense of starting a cold pulp mill. The mill has been in a soft shut down, which keeps it warm for a quick restart.
The receiver in a 20-page report posted on the website on Monday highlighted there is difficulty in selling the pulp mill when its unclear whether a wood fibre supply agreement with Canfor would stand. Canfor's position is that is under no further obligation to deliver wood chips or pulp logs to the pulp mill under an agreement it says has been broken.
The receiver says Canfor's actions are having a negative impact on its ability to sell the mill. "While several parties remain interested in acquiring Mackenzie, without any certainty as to the receiver's ability to assign the Canfor fibre supply agreement in good standing, it is doubtful that any agreement resulting in a meaningful recovery can be concluded with any of those parties," said the receiver.
PricewaterhouseCoopers intended to request a stay of proceedings until Aug. 1 preventing Canfor from terminating the wood fibre agreement. It was not clear Monday how the court ruled.
B.C. Forests Minister Pat Bell said the sale of the Fort St. James mill was a positive development.
Bell said the province is supportive of the wood fibre agreement remaining in place, but acknowledged it is ultimately a contractual relationship, and one which will be decided by the courts.
The Prince George North MLA suggested that fibre supply should not be a barrier to operating pulp mills -- whether they be in Nanaimo, Mackenzie or Kamloops. Bell said the province's newly created new tenure rights to recover wood waste from the bush, and which gives access to beetle-killed timber, could provide an opportunity for pulp mills.
However, Bell acknowledged that residual wood waste from sawmills would be less expensive than logging, transporting and chipping whole logs even if the charge for the timber was zero.
Veteran Mackenzie pulp mill worker Rick Berry reacted angrily Monday to the latest news, saying he feels like he's been lied to.
As early as Monday morning, Berry said workers believed the pulp mill was about to be sold and it could be up and running within two weeks. Berry, one of a handful of workers on the job keeping the mill warm, said he expected to be laid off immediately. "This is absolute crap. I'm going to have to leave. I can't stay here," he said.
None of the six major forest manufacturing mills are operating in Mackenzie, a community of 4,700 about 175 kilometres north of Prince George.
Berry questioned why Canfor and AbitibiBowater are allowed to keep their timber cutting rights when they are not operating their mills in Mackenzie.
-- With files from Canadian Press.
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Last Updated ( Sunday, 07 September 2008 )
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