Deal is dead. Pacific West Commercial Corp. will not be taking over NewPage Port Hawkesbury
September 21st, 2012 | Posted in Mill Sales/Transfers | 18 comments »
Pacific West Commercial Corp. will not be completing its purchase of the NewPage Port Hawkesbury mill in Nova Scotia.
The deal fell apart when the Canada Revenue Agency did not approve the advanced tax ruling that would have seen Pacific West Commercial Corp. use a $1 billion tax credit to obtain low cost power from Nova Scotia Power in exchange for tax free dividends (read more about the rejected arrangement).
Statement from the Premier of Nova Scotia’s office:
Premier Darrell Dexter today, Sept. 21, responded with great disappointment on behalf of the people and businesses in Port Hawkesbury and the entire Strait region that Pacific West Commercial Corporation will not proceed with reopening the mill in that community.
“I know this news will be devastating to the workers and their families,” said Premier Dexter. “The province fought as hard as it could for those jobs because this government knows good jobs are the lifeblood of rural communities.
“There are some who would have been happy for us to turn our backs on those workers and their families the day it was announced that the mill would be idled. Even though we could not reach a deal in the end, I can proudly say that we did not abandon those people and we will not do so now either.”
The premier said that following the Canada Revenue Agency ruling, the province and Pacific West Commercial Corporation tried their best to find a way forward within the financial framework already announced.
“The negotiators have worked extremely hard this week to tie down those details,” Premier Dexter said. “But in the end the Canada Revenue Agency ruling made this an impossible situation to overcome. Every option identified exposed Nova Scotia taxpayers to too much risk and the province was not prepared to accept that.”
Premier Dexter noted that the employees took significant steps to set the mill up for restart on a competitive basis, and that Richmond County worked hard to arrive at a fair agreement on property taxes.
“Everyone had a role to play if this mill was going to reopen and be successful. The province took every reasonable step to keep this mill resale ready and facilitate the reopening.
“The key for Nova Scotia was that this mill operates for the long term and that the jobs be there for decades to come, not just a year or two.”
The premier said he will meet in the coming days with municipal officials and other community leaders to discuss transitional support for former workers, and those in the forestry sector.
“I believe there is significant potential to continue building a forestry sector that will support workers, their families and small businesses across this province,” Premier Dexter said.
“This is not the end. I said from the beginning that the province will stand with the Strait area, and just because an agreement was not reached doesn’t absolve us of that commitment.”
Since it was announced in August, 2011 that the NewPage Corporation would idle the mill, the province has focused its efforts on ensuring the mill remained ready for resale and a quick restart by maintaining the supply chain and keeping the necessary forestry infrastructure in place.
Statement from Pacific West Commercial Corp.
Over the past week, Pacific West Commercial Corporation has been involved in extensive discussions with the Government of the Province of Nova Scotia and other stakeholders regarding the planned restart of the Port Hawkesbury paper mill in the absence of an advance tax ruling from the Canada Revenue Agency. The tax ruling was a key condition to completion of the transaction and a critical factor in ensuring the economic viability of the mill. Without the tax ruling, the restart of the mill was made immensely more difficult.
Despite the best efforts and intentions of the Government of the Province of Nova Scotia and Pacific West, both parties have concluded that the impact of not having the advance tax ruling cannot be mitigated without unduly compromising the long-term competitive position of the mill and negatively affecting Nova Scotia taxpayers. Ronald Stern, Pacific West’s President, said “It is extremely disappointing for everyone involved in the year-long effort to restart the mill to realize that we have been unable to achieve our collective goal, and that our vision of a world class, competitive, paper manufacturer in Port Hawkesbury will not be realized. Notwithstanding this, we are deeply appreciative of the enormous efforts and commitments of all those involved, especially the Government of the Province
of Nova Scotia, the mill’s employees and the many local suppliers and other stakeholders who we hoped would be able to benefit from the restart of the mill. We regret that the impact of the absence of the tax ruling could not be overcome despite the collective efforts and contributions made by the many parties involved.”
Related Posts
- Canada Revenue Agency rejects Pacific West Commercial Corp's tax deal
- No special power deal being offered to Pacific West Commercial Corp.
- Nova Scotia Premier announces new deal to reopen Port Hawkesbury paper mill
- Let's look more at the $1 billion tax loss that is involved in the Port Hawkesbury Paper deal
- Statement from Ron Stern regarding Port Hawkesbury paper mill
- Concern over Nova Scotia's final agreement with Port Hawkesbury Paper
- Who is Ron Stern, and what are his plans for the Port Hawkesbury mill?
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Take this as a lesson Mr Dexter……Nova Scotia wants out of big corporations that leech off its employees and its communities as a way to make a profit on a dying industry like Pulp and Paper…..we don’t want them here anymore…..I personally hope that mill and Mersey are bulldozed over like the tar ponds and parks are put in their place……We don’t need outside CEO’s coming here like it’s a place to get their “fix”.
We can now take the lands , that always belonged to us in the first place, and use them wisely and efficiently to support our sparsely populated communities for the long haul instead of throwing money that could be spent on such endeavours away to dying industry…..Sydney Steel died, so did paper mills in this province….we must move past this now and think ahead.
“The key for Nova Scotia was that this mill operates for the long term and that the jobs be there for decades to come, not just a year or two.”
Christ that sounds familiar……
The premier said he will meet in the coming days with municipal officials and other community leaders to discuss transitional support for former workers, and those in the forestry sector.
Holy shit that too….I’m having deja vu
Sorry to hear this NewPage brothers and sisters…hold your head up high…you fought a good fight…..but a fixed one.
Don’t let your guard down yet, cuz Cole’s and his henchmen will be after you next.
well considering there were about a dozen companies submitting bids for the mill Beachmeadows the premier actually is wise to say what he has said. Stern only know the pulp and paper business it seems via 100 employees in Linn Oregon and maybe 300 in Alberta. This was the wrong suitor to allow at this plant. If you look to my prior post you will see Mills for Asian Companies are actually something they are paying money for. It is not always about making paper but it is certainly not about taking dollars out of taxpayers pockets either. 300 people will be going to work at the plant with or without stern as the new biomass electric plant is a 200 million dollar investment by NSP. Northern Pulp and others will probably be providing biomass for that plant. There will be other much more qualified companies kicking the tires and making offers for this plant.
Fresca your statement has some truth but also some misunderstanding of what is going on with pulp and paper mills in the world. Yes Newsprint and other paper products are declining. Pulp production however encompasses much more then simply making the end product into paper. Among the suitors rejected for the final two was a fortune 500 company named Aditya Birla Group which recently bought the Terrace Bay pulp mill in Ontario. The company is not looking to buy mills for paper product. It seems the man made fabric rayon is in high demand for LCD displays, Tire Cord, Carbon Fibre and clothing material. Aditya Birla Group as an East Indian Company is not new to buying Pulp mills in Canada and turning them into the production of raw materials for Rayon. In the mid 1990s they bought the Atholville mill in Northern New Brunswick and it has run continuously since with little government money. Aditya Birla Group bought the Nackiwac mill in New Brunswick and is now putting 90 million dollars into it to prudct raw material for Rayon. For the Terrace Bay deal ,that was recently concluded Aditya Birla Group, did not hold a gun to the heads of Ontario or the Community as they had a late suitor for that mill with the same intention based in China. Aditya Birla Group has set out plans to invest 250 million dollars over 5 years into terrace bay. From my investigations Rayon can be created via cotton pulp or wood pulp but bamboo in Asia is not as suitable in the production of rayon as our forest resources. Cotton is in short supply because of droughts in growing areas Stern group looked to the Billion dollar tax credit like any financial fund management groups would. Stern is an infant compared to Aditya Birla Group which has a history starting in 1855 and growing to a 40 billion dollar a year operation with 130,000 employees. Aditya Birla Group has both the financial resources and the channels to make this mill profitable without the taxpayer. This is the type of company we want in our region not some guy who will demand everything from us including 3.5 million to market supercalendered paper to the US. One of Sterns executives mentioned in Anitgonish , before the chamber of commerce, about diversifying the products made at Port Hawkesbury. He did not mention Rayon which goes to show how utterly out of depth Stern Group is with Pulp production in the world. They know providing product to their newspapers in Manitoba it seems and looking for the next opportunity to make a quick buck. An Aditya Birla Group is in business for the long haul and sticks to constants including vertical intregration from producing Van Heussen Shirts back to the fibre coming out of New Brunswick that partly produces the end good. This is a company that bought part of one of Canadaès largest companies Alcan Aluminum for 6 billion dollars and the next year turned over 10 billion in revenues without reselling the company. Rayon going into LCD screens , Clothing and a many products is not going away like Magazine paper demand. What is Port Hawkesburys best advantage for this mill and the Aditya Birla Group. This mill sit on a harbor that is ice free in the winter, has no Air draft and a water draft of over 100 feet in depth. This Mill could produce for the Asia Market with super calendered via a well connected Aditya Birla Group. On the same ships this group could be shipping dissolved pulp from the New Brunswick mills and even the Terrace Bay Mill. There is a future for this mill with the right buyer. Problem with North Americans has been too narrow a focus.
OMG, high dissolving pulp (rayon) is produced in PULP mill. NewPage is a PAPER mill. They have almost no common equipment. You would still have to rip down the ‘new’ mill and build a pulp mill. lmfao……….
The mill will be dismantled before the end of the month. That’s how a bankruptcy proceeding works. If Stern couldn’t make this work with everything he was given, there is no other scenario under which this plant makes money.
The Lorax does or did Terrace Bay,Nackawic or Atholville have equipment to produce dissolving pulp when Birla took them over in 2012 , 2008 and 1996 respectfully . Probably not as Birla is investing 250 million in Terrace Bay and over 90 million in Nackawic. The plant in Port Hawkesbury will be mothballed like Atholville as part of this property now a Nova Scotia Power Biomass electric plant costing about 200 million dollars. The advantage for Birla would be they could ship out all the dissolving pulp from Port Hawkesbury from a the wharf they would own with no draft restrictions in a year around ice free harbor. Supertankers of anysize port in the strait of canso , acrros the Strait Mahar Terminals is building a Container facility that will take any container ship. Terrace Bay, Nackawic and Atholville don’t have that in their favor yet AB group at buying and investing as they have since 1855 across the globe. You don’t think a company of the scope of Birla could not use the super calendered machine for magazine customers in Asia? Mazagine paper may be on the decline in North America and the provincial funding of Stern group to sell into the US market would be problematic with a tariff war probably the result. This Birla company ,as shown with the 2007 purchase of just a part of Alcan Aluminum, has money and knowledge of how to make more money. They bought a portion of alcan for over 6 billion dollars and then had gross revenues in excess of 10 billion every year since. Birla seems to know something guys in Vancouver don’t how to make money without the majority being from taxpayers.
absolutely Reduced considering the odd fight Birla had to buy Terrace Bay with a last minute challenge from a Chinese Company. There is gold in dissolved pulp because rayon demand will exceed supply until at least 2015 and probably beyond. The Two companies looking to dismantle the plant probably included these two Asian companies.
What everyone is forgetting is that it doesn’t matter what the refiners have running through them to make whatever product they would make. The fact is that they consume massive amounts of electricity, which at twice of what Quebec charges their ratepayers, is the highest in the country here in Nova Scotia and is increasing exponentially all the time to the point where with no competition from anyone else against NSP (which is not happenning in our lifetimes) we probably will be paying the highest power rates in the world. There is no way any company that consumes that much power to make a product can make a profit here no matter what they try to load on ships at their wharf. And no one need not bring up the power that is to be brought here from Nefoundland down the road, as we are just a throughfare for that feed to larger markets. That will never be given to us here as a form of less expensive power. I expect NSP to come up with an excuse to charge us more because of transmission of such feed.
The other bidder was northern pulp. They will not be acquiring NewPage. Period. That leaves the dismantling. There won’t likely be a white knight at the last minute after this fiasco.
A little primer on rayon. It requires a DIGESTER, not refiners. It’s just insanity and ignorance to think you could convert Newpage to rayon. You would need to sell everything to raise funds to build a PULPING mill. And then you’re $400m short. There are enough PULP mills available now for cheap. Building one from scratch in Port Hawkesbury will not happen.
So indeed what you are saying in Brila will not invest to make a rayon line ? Well news for you they paid 300 million to purchase Terrace Bay , They annually turn over 40 billion dollars annually , they are the worlds largest maker of rayon and even with increasing capacity worldwide the Rayon market demand will not be fully met until 2015. Northern Pulp in case you havent read recently restarted a large saw mill in Pictou County and is looking for more assets one would assume. These Asian corporations are not little amatuer hour affairs like they drama we witnessed for the last year.
They paid $2 million, plus assumed liabilities (around $25 million in debt).
They obviously invest, but in appropriate opportunities. Converting a PAPER mill to dissolving pulp would never work. If you bothered to check the mills listed, you will find they were PULP mills, and seeing as you don’t know the difference, you should probably stop posting until you do. Northern Pulp is in serious financial trouble. People are leaving there now. There isn’t even enough money or people to carry out their planned shutdown.
I get the feeling you are the same moron from Sydney who wanted to buy NewPage and covert it’s product line. And moron is a compliment.
Actually I live two miles away from Abercrombie Point and the Northern Paper Mill. In Regards to Northern Pulp unless you work in that mill you don’t know what is going on more then I do and I know many people working there.
1. If you only ‘know’ people who work there, then you truly know less.
2. You are a liar or an idiot. If you actually knew anything about mills, you would not be ranting about making rayon in a paper mill.
3. Time to shut up and fuck off.
Have you checked the Sault St. Marie Papers ? They are saying 300 million for purchase price .
Well i know the diff between digesters and refiners and pulp or newsprint mills……doesn’t really mean anything till NSP gets put in its place. Man you would be lucky to make money at a dairy treat let alone a friggin pulp, paper, or rayon mill with the price of power in Nova Scotia.
And I would be a little apprehensive to give our natural resources to a company like Aditya Birla Group….let them strip our land and get the hell out….DUH!!!
If Dexter would remove the blinders and take a multitasking course……he could drop the hammer on NSP and put the screws too this free trade shit cuz neither are in our best intrest. Oh yea and canada should give Quebec what it wants and cut the ties…..and give them the Queen from Queens County
If Aditya comes into Nova Scotia, it will be at Northern Pulp. And you are wrong – NSP has no bearing on that mill. They have a generator
Sadly, it would have likely been a bad investment for this family-owned company… the paper/forest industries are not doing well, and Pacific West isn’t in the position to help us out in our faltering economy.
Good luck to the people of the mill, to finding new (maybe even better) jobs!