Deal near to re-open paper mill

THUNDER BAY, Ont. —Thunder Bay Fine Papers Inc. announced yesterday it has signed a letter of intent with an unidentified Canadian investment group that’s expected to permit the purchase and restart of a closed local paper mill owned by Cascades Inc.
Thunder Bay Fine Papers, a private company formed after the mill was closed in early 2006, didn’t disclose how much money would be involved, but media reports have suggested about $35 million will be needed.
The investment group will provide funds required to make the capital improvements required to reduce the mill’s operating costs, Thunder Bay Fine Papers said.
Dennis Bunnell, president of the local company, said the investment group has experience in the forestry sector.
He also credited the provincial Liberal government of Premier Dalton McGuinty with paving the way for the potential investment deal, which has yet to be finalized.
“Without the steps taken by the McGuinty government to restore the competitiveness of the forest sector, we would not be in a position to go ahead with our plans to re-open this mill,” Bunnell said.
Company spokesman Andre Nicol, vice-president of sales, said the purchase of the mill is expected to close by as early as February, with operations restarting in March.
Nicol agreed the province has “stepped up to the plate” and done some significant things to help.
For instance, he said, the province has announced preferential electricity rates for large users in forestry sector, including pulp and paper producers.
The province also will support half of the capital program required to make improvements before the mill is restarted, with a small part of that through grants and the majority through loan guarantees.
Other help is available from various provincial programs and ministries, he added.
The environment ministry, for example, is “not going to make life particularly difficult for us. As long as we can stay in compliance with the standard regulations, they’re not going to be after us to take care of any long-term environmental things that have been there for generations before,” Nicol said.
“If we didn’t have that attitude, we would have had a problem.”
The investment group will put in a substantial amount of equity, owning part of a joint venture with Thunder Bay Fine Papers, and help arrange debt financing for the operation.
The joint venture would buy the mill from Montreal-based Cascades, which stopped making paper there last January due to a number of factors, including high electricity, natural gas and fuel costs, and a high Canadian dollar.
Nicol said that, since then, the private local group has reached a memorandum of understanding with the union representing most of the mill’s workers.
He said the union deal “has lots of flexibility that gives us 10 years of labour peace, which is something that we needed to go for the financing.”
A representative of the Communications, Energy and Paperworkers Union said the announcement of a potential re-opening was “great news,” but warned the overall job situation in Northern Ontario remains grim.
Cec Makowski, the CEP’s Ontario region vice-president, said McGuinty and Natural Resources minister David Ramsay need to focus now on the rest of Ontario’s forestry sector.
“The forest industry is still in crisis,” Makowski said.
He estimated there have been about 5,000 jobs lost and, in comparison to that, the jobs that will be saved in Thunder Bay will be relatively small.
Nicol said the workforce at the mill eventually could grow to about 340 people as production is ramped up. He couldn’t say for sure how many were employed there prior to the closure, but admitted it was substantially more.