Sun Wave looking for a win-win solution to avoid litigation with Prince Rupert, British Columbia, regarding ownership of property; company still has interest in facility, says spokesperson

PRINCE RUPERT, British Columbia , March 10, 2010 () – While residents await word on the future of the Watson Island pulp mill site, which is currently the focus of litigation between the City of Prince Rupert and Sun Wave Forest Products, Sun Wave spokesperson Bill Belsey says he and the company are looking for a resolution that could create a win-win situation.

Currently there is litigation related to the ownership of equipment on the site and, according to Belsey, litigation related to the way the tax-sale went through, but he hopes that can be avoided.

“The discussion is that there is a contract in place and the position of Sun Wave is that not all clauses in the contract were executed by either party,” he explained, alluding to an arbitration clause that would have sent the two parties to arbitration if Sun Wave was unable to pay taxes.

“Sun Wave Investments still has an interest, and I would say a vested interest, in that property...Sun Wave would like to have that property back. The company is looking at other uses of fibre, not pulp, but perhaps a pellet plant. There is an opportunity to build something here and Sun Wave is interested in working with other companies that bid on the site. Surely Sun Wave does not need all of that property, and there are opportunities to work together.”

Belsey said Sun Wave put in two bids on the site during the tax sale last fall - one with more money and fewer conditions and one with more conditions and less money.

Belsey said that the Chinese investors have been in town three times but have been unable to meet with Mayor Mussallem, something Belsey said he understands since no advanced notification of the visits was given although the investors were in for days at a time each visit to hopefully get a meeting. But in his view the ball is now in the City’s court.

“Sun Wave hopes to sit down to discuss the situation and come up with a resolution to satisfy all parties and avoid the costly litigation path we are going down...My hope would be for myself, as a Sun Wave representative, and Mayor Mussallem to sit down and say ‘This is my bottom line’ and find a way to move forward,” he said.

“I think it is going to be up to them to contact Sun Wave or myself to help settle the situation...It can be a win-win, but not if one side won’t talk.”

Messages left with Mayor Mussallem on Monday were unreturned as of press time.

Another issue of contention is the way the mill was taxed. Belsey says the taxation was based on an operating pulp mill with a value of $58 million and, while it was depreciated to just 10 per cent, that $5.8 million is still more than the $3.3 million the company paid for the site.

“It is difficult for Sun Wave to understand how it is taxed on a value of almost $60 million when the property is not worth that or even close to that,” he said, noting the City was seeking just $13 million in the tax sale.

“It’s important for people to know that, yes, Sun Wave has to pay taxes and as long as I am involved I will push for that. But it is ridiculous to tax the site based on the value of an operating pulp mill.”

The City took ownership of Watson Island last September and put the property on the market in a tax sale, seeking a minimum bid of $13 million and a business plan from would-be purchasers. To date there has been no announcement of a potential buyer, although the Lax Kw’alaams Band made its intentions to own the property well known.

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