Numbered company selected to buy St. Marys Paper in Sault Ste. Marie, Ontario, might seek to redevelop mill into biomass facility with a cogeneration plant and liquidate the papermaking assets, says court-appointed monitor

LOS ANGELES , March 21, 2012 () –

The winning bidder for St. Marys Paper Corp. in Sault Ste. Marie, Ontario, is a number company that might redevelop the mill into a biomass operation but would not make paper, according to court-appointed monitor Ernst & Young Inc., reported ForestTalk.com on March 21.

2319839 Ontario Inc. is a consortium that includes an auctioneer, a real estate developer, a metals recycler and a forest products company, according to Ernst & Young. None of the company names was revealed nor was the sale price.

However, Ernst & Young said that the buyer might turn the mill into a biomass operation with a cogeneration plant and liquidate the papermaking assets, ForestTalk.com reported.

Under the terms of the sale, all employees of St. Marys Paper would be terminated before the sale closes.

The mill yard, which has a lien in favor of the Ontario Ministry of Natural Resources, is not included in the sale; but Ernst & Young will continue to try to sell it, reported ForestTalk.com.

Of the 36 parties who executed confidentiality agreements in order to have access to St. Marys Paper’s financial data, nine parties submitted bids, according to Ernst & Young.

Of these, only three were interested in operating certain parts of the mill or converting it into a biomass operation with a cogeneration plant and liquidating all or some of the mill’s assets. There was minimal interest in continuing to make paper, ForestTalk.com reported.

Not a single bid included an offer high enough to cover the mill’s debt to its owner, International Forest Products Corp.

Only one of the three bidders that wanted to continue to operate part of the mill included a cash deposit with its bid, but this offer was later withdrawn after one of the two companies involved lost interest in the venture, reported ForestTalk.com.

Bidders expressed views that the mill’s supercalendered paper operation was uncompetitive and restarting it would not be worth the investment. In addition, they cited the debt owed to International Forest Products, said Ernst & Young.

As of last Aug. 31, St. Marys Paper owed International Forest Products more than C$7.6 million, in addition to the slightly more than C$1.0 million the parent company spent on the receivership process, ForestTalk.com reported.

The primary source of this article is ForestTalk.com, Canada, on March 21, 2012.

 

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