There is some indication that an announcement concerning the future of Terrace Bay Pulp is forthcoming – possibly as soon as tomorrow.

Terrace Bay Pulp is currently under creditor protection, for the second time since 2009. On June 15, 2012, Terrace Bay Pulp was granted another extension to its latest creditor protection period – until July 16, 2012.

The mill has operated only briefly after an explosion of a blow tank on October 31, 2011 resulted in the death of an employee. Due to a lack of liquidity, the mill was unable to repair the damage and replenish the raw materials necessary to resume operations at the mill and entered a period of creditor protection through the Companies’ Creditors Arrangement Act (CCAA) on January 25, 2012.

Recent Developments

The mill has been making improvements, while idled, from funding it received through the federal government’s Green Transformation Program with hopes these upgrades will attract a purchaser. This work is expected to be complete by July 16.

Insurance has covered repairs to the equipment damaged in October’s explosion, minus approximately one million dollars as a deductible.

It is expected that Terrace Bay Pulp will exhaust its cash resources by late July.

Sales Process

Ernst & Young, as monitor, has been working with Terrace Bay Pulp to find a purchaser for the mill. Originally, a successful bidder was to have been chosen by March 19, 2012, but consultations between the company, Ernst & Young, and the province of Ontario as a major creditor resulted in the sales selection process being extended until June 15th, or later if required to close a deal.

A number of offers were received. One bidder has been actively involved in discussions with Terrace Bay Pulp, Ernst & Young, and the Province of Ontario.

About the Mill

The Terrace Bay Pulp mill was constructed in 1948 by the Kimberly-Clark Corporation.

Neenah Paper acquired the mill from Kimberly-Clark in 2004.

Currently Terrace Bay Pulp is a wholly-owned subsidiary of Lucky Star Holdings Inc. and is one of several companies in what is sometimes referred to as the Buchanan Group. In 2006, the Buchanan Group acquired the mill from Neenah Paper.

The mill is capable of producing various blends of northern bleached softwood kraft pulp and northern bleached hardwood kraft pulp, together with certain other byproducts.

The mill has two full integrated pulp lines, and three integrated pulp machines, with a rated capacity of approximately 550,000 air-dried metric tonnes of pulp per year (hardwood and softwood combined).