Tag Archives: NewPage Port Hawkesbury

The Supreme Court of Nova Scotia has dismissed the claim of Ligni Bel that claimed their sawmill business was owed $33 million after NewPage Port Hawkesbury went into creditor protection in 2011.

Ligni Bel Ltd. argued it was owed money due to the increased log costs when NewPage Port Hawkesbury failed to supply enough wood for Ligni Bel’s sawmill operations.

NewPage Port Hawkesbury argued they took extraordinary measures to delivery studwood to Ligni Bel even when Ligni Bel fell behind in its payments on their fibre agreement.

The court ruled there is no evidence to suggest NewPage Port Hawkesbury tried to avoid its responsibilities.

Ligni Bel shut down its operations in November 2011.  Northern Pulp purchased Ligni Bel’s sawmill near Scotsburn, Nova Scotia in 2012.

Read more:
NS: Court dismisses $33M claim from Scotsburn sawmill operator (Daily Business Buzz)

Lionel Forsyth, a former CEP union president, said the union should be paying for a lawyer for the NewPage pensioners who were told they each have to pay back thousands in pension overpayments.

Forsyth told CBC that “the union should represent the unionized brothers and sisters that are now facing financial devastation. I think they should represent them with the lawyers’ fees.”

There are approximately 250 workers who retired early from NewPage Port Hawkesbury in Nova Scotia have been paid a collective $5 million too much according to Morneau Shepell Ltd. the current pension plan administrator.  Morneau Shepell has blamed the error on the previous plan administrator, Aon PLC.

Morneau Shepell has asked Aon to pay for the error. If an agreement can’t be reached, the matter may end up in court.

Read more of this story from CBC:

Hire lawyer for NewPage pensioners, leader urges - Pensioners told they owe combined $5 million in pension overpayments

Former workers of NewPage Port Hawkesbury in Nova Scotia were told this week that they have been overpaid and will each have to pay back thousands of dollars.

Morneau Shepell Ltd., the current pension plan administrator, sent out letters to the pensioners telling them how much they will have to pay back, and blamed the calculation error on the previous plan administrator, Aon PLC.

The mistake was made while calculating the early retirement provisions years prior to the idling of the mill in 2011.  About 200 people who opted to take a specific front-loading pension option are the pensioners who are now said to have been overpaid, and owe a collective $5 million. Some people have found out they have been overpaid as much as $60,000.

Paul Chang of Morneau Chapelle, said the letter that went out to pensioners was not a bill. He said it simply informed them what they would owe if Morneau Chapelle isn’t able to recover the money from Aon PLC.

The topic was raised this morning by members of the Nova Scotia legislature’s public accounts committee.

Nancy MacNeill Smith, Nova Scotia’s superintendent of pensions, told the committee she has no authority to fix the mistake and that Aon PLC should repay the money.

Labour Minister Marilyn More said although the government is monitoring the situation and is in contact with Morneau Chapelle, there’s really little it can do in the end.  “At this point I’m not sure that there are any options that government has. This is a private pension plan and the premier is already on record as saying that we’re not going to be spending taxpayers money on private pension plans.”

The pension plan for these workers is already underfunded $140 million.  The Government of Nova Scotia passed legislation in the spring to delay the windup of underfunded pension plans at the NewPage Port Hawkesbury mill for 11 years hoping for a recovery from low investment returns.

Pensioner Blair Samson told CBC, “I think it’s going to be devastating. I think you’re going to see Nova Scotians from our end that worked at the mill go on welfare because I don’t understand how they can make these payments.”

Samson said his pension is 34% smaller than he anticipated and he has been told he owes $18,000 because of the calculation error.

Read more:
NewPage pensioners told to pay back thousands (CBC)
Error may cost former mill workers millions (Metro)

The sale agreement between Pacific West Commercial Corp. and NewPage Port Hawkesbury was approved by the court today.

Pacific West Commercial Corp. also received approval of its amended power rate applications by the Nova Scotia Utility and Review Board today.

The only thing remaining to wrap up the sale is the signatures.

The purchase is expected to be completed tomorrow and most of the employees required to run the super calendared paper machine will be back on the job on Sunday.

After the sale, the mill will be called Port Hawkesbury Paper.

Read more media coverage:
Pacific West power rate approved, plan to purchase mill will go ahead (Cape Breton Post)
Mill gets discounted power rate (The Chronicle Herald)
Nova Scotia court approves sale of NewPage paper mill to Pacific West Commercial (Cape Breton Post)
Nova Scotia court approves sale of NewPage paper mill to Pacific West Commercial (Global)

NewPage Port Hawkesbury is appearing in Nova Scotia’s Supreme Court today to ask for an 8th extension to their original creditor protection period.

The company is requesting an extension to October 5, 2012 to allow time for the Nova Scotia Utility and Review Board to approve the latest power agreement, allowing Pacific West Commercial Corp. to complete its purchase of  mill, or allowing the Monitor (Ernst & Young) to determine the next steps should the sale deal not proceed.

Should the Utility and Review Board require a full hearing for the power rate application, Pacific West Commercial Corp. is asking the board to approve the rate on an interim basis allowing the sale to proceed.

Update:

The Court has granted the extension.

This statement has just been released by the Province of Nova Scotia:

Premier Darrell Dexter today, Sept. 22, announced that the province has negotiated a new, better agreement for Nova Scotia taxpayers to reopen the former NewPage mill and keep hundreds of people working in the Strait region.

“I want to thank the people of the Strait. Their hard work, sacrifice and determination over the past year has paid off,” said Premier Dexter. “Even after it appeared there was no hope, both parties worked through the night and I’m very pleased to say we now have a new agreement that is a better deal for Nova Scotians.

“The bottom line is that under this new agreement, the total amount the province will contribute to support the workers, families and businesses throughout the Strait should be repaid in as early as 12 years and the province will have earned about $150 million in tax revenue.”

In August the premier announced a number of investments to support the reopening of the mill and protect the 1,400 jobs that rely on its operation. The province has also invested $36.8 million to date to keep the mill in hot idle and set up the Forestry Infrastructure Fund to keep people working in the forestry industry and produce product, a necessary part of keeping our forests healthy and sustainable.

Under this new agreement, all of those investments will be recovered in full.

“This government has worked for a year now to restart that mill,” said Premier Dexter. “We didn’t do this because it was popular – we did it because it was the right thing to do.”

The new arrangement will significantly increase the annual share of profits paid to the province and it will ensure a significant amount of the tax savings generated by Pacific West Commercial Corporation(PWCC)in other provinces will be shared with Nova Scotia.

In addition to that, as a result of the Canada Revenue Agency ruling earlier this month the province will receive millions in additional revenue.

Much of the original agreement hinged on PWCC receiving a positive ruling from the Canada Revenue Agency on its taxes. When that did not happen, the province continued negotiating with the company to find a way forward within the financial framework already announced.

At the same time, the Nova Scotia Utility and Review Board had provided until 4:15 p.m. on Sept. 21, for a revised rate application filing by PWCC. The board made clear that, provided an application was received by this deadline and that ratepayers would be no worse off under the revised filing, it would be in a position to provide a revised order on or before the court-imposed closing deadline of Sept. 28.

Despite the parties’ best efforts, that deadline could not be met and both sides walked away from the table last night.

“Every option identified at that point exposed Nova Scotia taxpayers to too much risk and the province was not prepared to accept that,” Premier Dexter said. “However, later in the night there were further discussions. We worked hard and were able to come up with something that further benefits taxpayers and will make the mill more competitive.”

Pacific West and the province have agreed that all elements of the province’s previously announced support remain the same, with the following exceptions:
–the previously repayable loan of $40 million will now be earnable by the company, subject to verification of an equivalent amount of taxes being paid by Nova Scotia Power as a result of energy purchases under the proposed new tariff. The province will forgive no more than what is paid to the province in taxes, to a cap of $40 million, over a maximum of 12 years
–profit-sharing increases from a cap of $9 million, to a cap of $24 million
–Pacific West will incorporate other mills and related assets into the mill (Port Hawkesbury Paper). This will improve its competitive position through disposition of the accumulated tax losses
–in recognition of the above provincial investments, the province will share in the benefits of the use of the accumulated tax losses available through Port Hawkesbury Paper in connection with the other assets. For every dollar of accumulated tax losses used by the company, the province will be paid 32 cents, and 18 cents will be directly reinvested in the mill to improve its competitive position, subject to review of the proposed investments by the province.

“This is the outcome people have been working towards for months,” said Premier Dexter. “Employees will be able to continue working to support their families, businesses will benefit from those families staying in the community, the province gets a better deal for taxpayers and the company is able to achieve the competitive position it needs to operate the mill profitably in the long run. It’s a win-win for everyone involved.”

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.”

As ForestTalk.com suspected, Nova Scotia Power is no longer offering a special discount power rate to Pacific West Commercial Corp.  now that the advanced tax ruling is off the table.

The advanced tax ruling would have allowed Nova Scotia Power to become a 30% equity partner in the mill and receive a combination of preferred and common shares of the newly created Port Hawkesbury Paper.

Because of the $1 billion tax credit, Pacific West Commercial Corp. will acquire with the purchase of the mill, Nova Scotia Power’s preferred shares would allow the utility company to receive weekly tax-free preferred share dividends in exchange for providing the mill with a much lower power rate.

Because this arrangement was not approved by the Canada Revenue Agency, if Pacific West Commercial Corp. completes its purchase of the mill, Nova Scotia Power will no longer be a partner, and the mill will be charged the industrial rate for power.

Pacific West Commercial Corp. can reapply to the Nova Scotia Utility and Review Board for a discounted rate, but time is not on their side if it is a condition of purchasing the mill.  The current creditor protection period for NewPage Port Hawkesbury expires on September 28.

Without a drastically reduced power rate, Pacific West Commercial has said it would be nearly impossible to generate a profit at the Port Hawkesbury mill.

“Unless the Port Hawkesbury mill can become a very low-cost operation, it simply will not succeed,” said Ron Stern of Stern Partners, the parent company of Pacific West Commercial Corp.

The province of Nova Scotia indefinitely postponed the technical briefing it had scheduled for early this week to explain how it will revise its financial aid package for Pacific West Commercial Corp.

At this time, it seems unlikely that the sale of the mill to Pacific West Commercial Corp. will proceed.

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Canada Revenue Agency has rejected the tax deal Pacific West Commercial Corp. had proposed as part of their proposal to purchase the NewPage Port Hawkesbury mill.

The rejected proposal would have allowed Pacific West Commercial Corp. to use $1 billion of accumulated losses by NewPage against its taxes.  Also, Nova Scotia Power would become a 30% owner in the mill and get paid in tax free dividends.

Over 100 people returned to work at the mill this week, to prepare it for reopening, despite the fact the sale deal has not yet been completed.

Nova Scotia’s Minister of Natural Resources, Charlie Parker, is making a statement regarding the decision this afternoon at 3:15pm Atlantic time.

Update: Nova Scotia Government to restructure package

The Province of Nova Scotia has indicated that they will restructure the $124.5 million package for Pacific West Commercial Corp. in the wake of the rejection by Canadian Revenue Agency.

Details will be released on Monday.

At the press conference this afternoon, it was revealed that under the proposed deal, the mill wouldn’t have paid provincial income tax.  Now, because the ruling was rejected, now the mill will have to pay income tax.

“Out of that new tax money, we’re able to re-work the investment that we had with them to allow them some cash flow here initially within the first critical couple of years,” he said. “But overall, again, there’s going to be no further investment on behalf of taxpayers in Nova Scotia, and in fact it may even be a net gain for the province.” (source)

Update: Statement by Minister Parker

Pacific West Commercial Corporation and Nova Scotia Power Inc. have been informed by the Canada Revenue Agency that an advanced income tax ruling, which was a condition to the completion of the sale of the former New Page mill, will not be provided.

I don’t have to tell the workers, businesses and families in and around the Strait region what a catastrophe the permanent shut down of this mill would be.

The truth is, losing that mill and those thousands of jobs would represent a hit to the economy that the entire province would feel.

At the same time, it isn’t reasonable to insist that Nova Scotia taxpayers should pay to keep that mill open at any cost.

So, as soon as we got word of the federal government’s decision, our government went to straight to work to see what could be done within the envelope of support already announced, to have the mill open and operate successfully for the long term.

I am pleased to announce that we have reached an agreement that we believe does that.

Here’s what we’ve been able to do: The tax ruling from the federal government, while it isn’t what Pacific West was looking for, will actually mean millions of dollars in tax revenue that the Province of Nova Scotia would not have otherwise collected.

We are able to use that windfall to create room for Pacific West to earn forgiveness on some of the loan money in the support package already announced. Even with that earned support, the province will still come out a bit further ahead under this deal, with more tax revenue than it would have under the previous deal structure.

There are those who would turn their backs on the workers and families in the Strait Region. Who would see small businesses in the region close because their customers are no longer bringing home a paycheque. Who would see programs and services erode because families move away.

Nova Scotians do not turn their back on friends, families and neighbours in an entire region, especially when there is a better choice.

I am proud to stand shoulder to shoulder with workers, families and community leaders throughout northeastern Nova Scotia have been working hard to ensure a good future for this mill.

A technical briefing and formal announcement of the details of the revised agreement will be provided early next week.

The Nova Scotia Supreme Court has approved Pacific West Commercial Corp.‘s request to spend $2 million to quickly restart the hot idled mill in Port Hawkesbury.

$500,000 will come from Pacific West Commercial Corp. and $1.5 million will be taken from the $15.8 million provincial fund that kept the mill in a hot idle state during restructuring.

The money will be used to ready the mill for a quick restart by bringing back workers, repairing equipment, and buying supplies.

Pacific West Commercial Corp. plans to recall about 300 employees in late September or early October, providing the Canadian Revenue Agency soon approves complicated tax arrangement between Pacific West Commercial Corp. and Nova Scotia Power.

Read more:
Court approves $1.5M to ramp up NewPage mill (CTV)
Court approves $1.5M from province for mill (Cape Breton Post)