Bankrupt St. Marys Paper in Sault Ste. Marie, Ontario, had attracted 'a reputable international group' interested in buying the supercalendered paper mill, the unidentified party had been working toward a purchase, says union

LOS ANGELES , January 6, 2012 () –

St. Marys Paper Corp. in Sault Ste. Marie, Ontario, had been working with a potential buyer before it was forced into receivership, according to the Communications, Energy and Paperworkers Union of Canada (CEP), reported The Sault Star on Jan. 6.

The interested party was “a reputable international group” that had been working on due diligence, a business plan, purchase financing, said Rene Lindquist, national CEP representative, in an interview.

The status of the interest by the prospective buyer, which was not identified, is unknown, said Lindquist, The Sault Star reported.

The CEP represents more than 300 workers at the mill, which has been idle since March 28, 2010 and has had only limited production in four of the past 23 months.

Talks with the party had been ongoing for several months, and the CEP had received a “letter of intent” for payments toward a severance payout in the event of an ownership change, said Lindquist.

St. Marys Paper CEO Dennis Bunnell was unavailable to comment on the party interested in the mill, reported The Sault Star.

The CEP threatened to force St. Marys Paper into receivership if the company did not address outstanding severance and vacation pay by Jan. 31, but it was beat out by International Forest Products Corp., when its bankruptcy application was approved last week.

The Massachusetts-based forest products trader had a multiyear marketing and logistics agreement with the mill, but took action when the mill’s long-time insurer cancelled its coverage and a replacement policy could not be arranged.

Under the bankruptcy filing, the mill’s employees are unsecured creditors and likely to get only pennies on the dollars they are owed by St. Marys Paper, said Lindquist, The Sault Star reported.

Court-appointed receiver Ernst & Young Inc.’s next step in the bankruptcy is expected to be to appoint its own monitor to determine the mill’s debt, according to the CEP.

Current owners of the mill have a 10-year power purchase agreement (PPA) for a proposed 35-megawatt cogeneration facility that was to be the basis of the new St. Marys Paper.

The status of the PPA and the proposed C$175-million cogeneration project is uncertain because of the bankruptcy, but Lindquist and CEP Ontario VP Kim Ginter said that they thought both were tied to the company’s current owners, reported The Sault Star.

The primary source of this article is The Sault Star, Sault Ste. Marie, Ontario, on Jan. 6, 2012.

 

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