Tag Archives: pension

Resolute Forest Products is reporting a net loss of $5 million in its first quarter of 2013.

This result can be compared to a net income of $23 million in the same quarter last year.

Excluding $33 million of special items, net income for the quarter was $28 million. Excluding special items of $16 million, net income in the first quarter of 2012 was $7 million.

“Our efforts to restructure mills and machines during the last two years will lower our manufacturing costs, which will help to mitigate the challenges facing the North American forest products industry,” said Richard Garneau, president and chief executive officer.

Pensions

Concerning the status of the funding relief measures related to the material Canadian registered pension plans, he added: “On April 26, we reached an agreement in principle with Company stakeholders in Quebec, the provincial government, and its pension regulator to replace the significant uncertainty associated with potentially material corrective measures in favor of more stable, predictable and balanced pension funding we need to run our business. Under this agreement, we would make reasonable incremental contributions in order to secure longer-term funding stability. With this significant progress in Quebec, we look forward to meeting very soon with the provincial government of Ontario and its pension regulator, and our Ontario stakeholders.”

Operating Loss

In the first quarter of 2013, Resolute Forest Products recorded an operating loss of $50 million, compared to $46 million in the fourth quarter of 2012. The $4 million unfavorable change reflects a $54 million reduction in sales, due to lower shipments of newsprint and specialty papers due to seasonality and market conditions, and capacity reduction initiatives. Overall pricing contributed $4 million, as higher transaction prices in wood products more than offset declines in newsprint. Cost of sales was down $19 million, due mainly to the lower volume, offset in part by costs associated with the annual outage at the Catawba, South Carolina, mill, higher mill start-up costs and increases in certain other manufacturing costs. The change in operating results was also favorably affected by a $42 million reduction in closure costs.

Outlook

Concerning the outlook, Garneau said, “While we are encouraged with the incremental progress we are seeing on newsprint export markets, we expect domestic pricing to remain under pressure until more tonnes produced in North America are shipped offshore. With markets for specialty papers strongly influenced by advertising spending, demand may remain sluggish as customers are cautious based on recent U.S. economic data. Recent demand and pricing trends in the pulp market are giving us reason for cautious optimism that it is gaining momentum after its prolonged slump. Finally, lumber pricing has been strong, and we expect it to remain at or near current levels, as shipments from Canadian producers continue to be limited by strained supply chains from the increase in demand.”

For more, including results by segment, visit:
Resolute reports preliminary first quarter 2013 reuslts (Resolute Forest Products)

Peter Brant, owner of White Birch Paper Company, is suing the law firm that handled the sale of one of his companies – SP Newsprint – during a period of debt reorganization after he became liable for the company’s underfunded pension plan.

Brant owned SP Newsprint which filed for bankruptcy protection in 2011, a year after his White Birch Paper Co. filed for creditor protection.

Shearman & Sterling, one of USA’s oldest and most distinguished law firms, represented Brant in a transaction to form a new company (BD White Birch Investment LLC) that would combine SP Newsprint and White Birch Paper Co. and acquire $94.5 million of White Birch Paper Co.’s assets out of bankruptcy.

Brant owned a 75% interest in both companies before the bankruptcy. He bought the remaining 25% of both companies for $16.9 million.  Then he struck a deal with GE Capital, one of SP Newsprint’s creditors, to sell SP Newsprint’s assets for about $145 million. By doing this, Brant became liable for SP Newsprint’s $76 million underfunded pension plan.

Brant is suing the law firm of Shearman & Sterling and names law firm partner Douglas P. Bartner as a defendant in the professional malpractice lawsuit.  Brant said the law firm must have known that the pension plan was underfunded and that the sale would result in Brant becoming liable for that shortfall.

Read more:
Newsprint Magnate Peter Brant Files Suit In Connecticut Against Law Firm (Connecticut Law Tribune)

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)

Kruger Inc. has announced that the active and retired unionized employees of Corner Brook Pulp and Paper have approved the proposal to apply funding relief measures to their pension plan’s deficit.

These relief measures were essential to the Mill’s ability to compete in the market and will enable the Company to pursue its assessment of the Mill’s long-term viability. The next step will be for the company to present a sustainability plan to its lenders and to the NL government within the coming weeks.

According to the final report issued by independent auditor Brian N. Hillier, the number of objections was the following for each group of members:

Active members (321): 19 objections (5.9%)
Retired members (645): 7 objections (1.1%)

Source: Kruger Inc.

Resolute Forest Products‘ pension plans are underfunded by $1.9 billion and its employees say they have already given up enough to keep the company in operation.

Minimal solvency level not met

Resolute Forest Products has not met the minimal solvency levels in its pension plans regulated by Quebec and Ontario’s funding relief regulations.  These regulations, adopted in 2011, affect approximately 80% of Resolute Forest Product’s unfunded pension obligations.

As a result of these new regulations, Resolute Forest Products has until March 2013 to adopt corrective measures to attain the target solvency ratio within 5 years.  The company needs to reduce its pension plan deficits by approximately $500 million.

The company says it will work with other plan stakeholders, including employees, retirees, unions and the provincial governments of Quebec and Ontario to develop corrective measures.  Resolute Forest Products reports that with interest rates currently near historic lows, the company will work with these stakeholders to develop corrective measures that balance the need to meet their undertakings to retirees, but also to provide the company with the funding predictability they need to manage our business.

Employee reaction

Gary Bragnalo, president of Communications, Energy and Paperworkers Union Local 39 in Thunder Bay, Ontario, said “We did enough. They went and bought Fibrek for a hundred-million bucks. They could have put that in the pension plan. So, if they’re gonna come back and ask for more from the workers, well, I don’t think it’s going to be too long of a conversation”.

Resolute trying to prevent wind up of pensions in Quebec, New Brunswick, and Newfoundland and Labrador

Resolute Forest Products filed a motion with the Quebec Superior Court on June 12, 2012 seeking an order to prevent pension regulators in each of Quebec, New Brunswick and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former Abitibi-Consolidated Inc. and Bowater Incorporated operations in these provinces, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial windup is a barred claim under the company’s 2010 creditor protection proceedings.

The company believes that such a declaration would be inconsistent with the court’s confirmation of the plan of reorganization and the terms of the company’s emergence from creditor protection proceedings.

Additionally, a partial wind up plan would likely shorten the period in which any deficit within those plans would have to be funded.

The pension regulators are expected to file contestations to Resolute Forest Products motion by the end of August 2012.

Letter to employees

Resolute Forest Products recently sent a letter to its employees with an update on the pension deficit.  In the letter, the company said  “the company has no intention of terminating the plan. However, if it were to become necessary to terminate the plan while it has a solvency deficiency, and where the company was not in a position to eliminate the deficiency, your benefits would be reduced.”

Sources:

• Resolute workers have done ‘enough,’ union says - Company and unions have 9 months to agree on corrective measures for pension plans (CBC)

• Resolute Forest Products 10-Q (Filed on 08/09/2012)

One of the four pension plan groups at Corner Brook Pulp and Paper voted against giving Kruger 10 years, instead of 5, to repay the shortfall in their pension plans.

Results of the vote:

-Pension Plan for Unionized Employees:
-Active members (326): ……………177 objections ……….54.3%
-Retired members (617): …………. 31 objections …………. 5.0%

-Pension Plan for Non-Unionized Employees:
-Active members (78): ………………6 objections ………….7.7%
-Retired members (218): …………..7 objections …………..3.2%

Under Newfoundland and Labrador legislation, in order for the relief measures to be applied, they cannot be opposed by more than one-third of members in each group (active and retirees). Consequently, with 54.3% of active unionized employees opposing the proposal, the relief measures cannot be applied to the unionized employees’ pension plan.

Kruger now plans to reassess the viability of Corner Brook Pulp and Paper’s operations. The pension relief measures were a crucial element in the Kruger’s strategy for the mill to improve its competitiveness and secure its future.

Kruger said the Kruger Company has gone to extraordinary lengths to support its Corner Brook operation in a very challenging market afflicted by declining demand for newsprint, increasing energy costs and the negative effects of a strong Canadian currency on exports.

In addition to these challenges, the Corner Brook Mill has to contend with other Canadian paper mills that have competitive operating costs and benefit from the additional advantage of funding relief measures for their own pension plan deficits.

Kruger said is disappointed with this outcome, especially considering the countless efforts that were put in over the last few weeks to communicate with plan members to seek their support.

Source: Kruger

Kruger sent a letter to its employees recently to say the company has been falsely accused of holding back information regarding the pension formula.

On Monday, the CEP held a pair of emergency union meetings in Corner Brook to discuss the alleged discovery that the negotiated proposal to grant the company a 5 year extension to make up for a deficit in pension plans would change the benefit formula.

Bruce Randell, president of CEP Local 242, said the reduction in pensions of current employees could be as much as 25% in 2014.

The deadline to approve the funding relief measures is Thursday.

The letter, signed by Daniel Archambault, chief operating officer of the Industrial Products Division of Kruger Inc., said “the company never had any intention to renege on its 2005 commitment and it is appalling to hear such declarations after we have helped the mill survive the recent recession and worked relentlessly with the unions to find solutions to secure the Corner Brook operation for the long term.”

Read more from The Western Star: Kruger says it was falsely accused by unions

Yesterday, May 9th, the Government of Nova Scotia introduced legislation that could result in better pension benefits for the workers and pensioners of the NewPage mill in Port Hawkesbury.

“Government recognizes that buying annuities in today’s market could mean a significant loss of benefits for NewPage employees and pensioners,” said Minister of Labour and Advanced Education Marilyn More. “We are taking steps today to give these women and men an option that could result in some market recovery and some restoration of lost value.”

Within six months of a pension plan closing, its administrator prepares a financial report that compares the value of the plan’s assets with its obligations. After that report is approved by the province’s superintendent of pensions, annuities are purchased to provide plan members future pension benefits.

NewPage’s four pension plans are underfunded. If annuities were purchased now, pension benefits would be reduced by up to 40 per cent.

The bill introduced this week would give the NewPage pension plans up to 11 years to recover from low investment returns and interest rates. While there are no guarantees about future market performance or interest rates, long-term performance has been positive.

It would also give members information to help them make their choice, the right to opt in or opt out of the extended wind-up, and an annual update of how the plan is doing each year of the extended wind-up.

“This bill will give our pensions a chance to grow and to take advantage of higher interest rates in the future,” said Archie MacLachlan, vice-president of Local 972 of the Communications, Energy, and Paperworkers Union, which represents NewPage’s unionized workers. “Our members understand that there are risks involved in the stock market and that interest rates may remain low for many years.”

Three of the NewPage pension plans are for unionized workers in the mill, office and clerical positions and woodland operations and the other is for salaried, non-unionized workers. As of Sept. 30, 2011, the four plans included 646 active employees, 763 retired members, 46 inactive members and 53 deferred members.

Source: Government of Nova Scotia

The Nova Scotia Government has listened to the pensioners of NewPage Port Hawkesbury and has indicated they will table legislation to delay the windup of NewPage’s underfunded pension plans.

Premier Darrell Dexter said he has discussed the proposal with non-unionized employees and the Communications, Energy and Paperworks Union, and said his government will give the idea “speedy consideration,” but couldn’t say when the legislation will be tabled.

The new owner of the mill, Pacific West Commercial, is not taking ownership of the pension plans of the previous owner – NewPage. Pensioners are hoping the pension plan will not be wrapped up immediately, because that will mean each worker will lose up to 30% of the value of their pension.

The premier says delaying the windup could help pensioners because the value of the plan could increase if the stock market recovers.

Progressive Conservative Leader Jamie Baillie says he supports the move to deal with pension plans that are underfunded by more than $100 million.

Source:
N.S. to delay windup of NewPage pension (CBC)

The workers and pensioners of NewPage Port Hawkesbury are asking the Nova Scotia Government to consider making some legislative changes that would allow them to recoup some of their pension losses.

As it stands now, the pension plan for these workers is drastically underfunded by approximately $130 million, meaning each worker and retiree will be set to lose 35% of their pension value when the plan is wrapped up.

Instead, the workers are asking that the pension plan isn’t wrapped up when the mill is sold to Pacific West Commercial Corp., but instead, delayed for several years, maybe as many as 10 or 11, to allow the pension to regain some of its value.

For this to happen, Nova Scotia would have to amend the Pension Benefits Act or introduce new legislation that will allow the pension plan to live on beyond the life of the mill.

Although, even in the best case scenario, it is estimated that this may allow only 5% of the loss to be recouped.

Read more:
NewPage workers ask for legislative pension changes (CBC)