A $25-million provincial loan is expected to give Terrace Bay Pulp the financial clout and leverage it needs to arrange further financing, pay off remaining creditors and get 350 laid-off mill employees back to work before spring.
The loan, a big step up from a loan guarantee the company was trying to secure from the province earlier this fall, “is simpler, and will make the process of starting up and getting people back to work happen faster,” TBP legal counsel Yves Fricot said Thursday, shortly after the loan was announced.
Though TBP has every intention of paying the loan back, the terms of the loan – including how long the company has to pay – won‘t be disclosed until all financial arrangements have been completed, said Fricot.
TBP is to be back in a Toronto courtroom this morning, requesting that Ontario‘s Superior Court allow it to continue to enjoy protection from its creditors for another 90 days.
Fricot said if everything falls into place, including ongoing efforts to secure funds from private sources, the mill could be back in production before March.
“It‘s too early to pick an exact date, but I would hope that the mill would be operating before the end of the 90-day (protection) period,” he said.
As news of the big loan spread through Terrace Bay, there was an outpouring of relief.
“What this means, essentially, is that our mill is going to start up again,” said Terrace Bay Mayor Mike King.
King said he wasn‘t surprised that the company was able to secure a loan, rather than just a loan guarantee.
“You‘re talking about a fairly modern mill that can produce up to 1,100 tonnes (of pulp) per day and has an abundant source of inexpensive (wood) fibre,” he said.
The plant, which the Buchanan Group bought in 2006, was idled in February this year following last fall‘s crash in pulp prices. The price has since rebounded to a healthy US $800 per tonne.
“If we were operating today, we‘d be making money,” Fricot commented.
Both King and Fricot credited Northern Development, Mines and Forestry Minister Michael Gravelle, whose riding includes TBP, for helping make the loan a reality.
An earlier report prepared by the Township of Terrace Bay said that the regionwide economic impact of TBP, when the mill is going full-steam, is nearly $2.5 billion per year.
About a dozen workers are back at the mill, providing maintenance and minimum heat.
Union officials, who heard about the provincial loan for the first time Thursday, said they are cautiously optimistic.
“It appears to be great news, but we want to see (the mill startup) come to fruition,” said Steelworkers staff rep Herb Daniher. “We‘ve got one tire on the truck – now we need to put on the other three.”
While Terrace Bay Pulp is often described as having good fundamentals – such as cheap fibre and a large capacity – the $25-million loan is not without risk, some observers said Thursday.
Communications, Energy and Paperworkers union national rep Marvin Pupeza said the province lost nearly $13 million when it backed an unsuccessful attempt to resurrect the former Thunder Bay Fine Papers plant.
The large amount of the TBP loan is bound to raise eyebrows among laid-off Buchanan lumber mill workers who are still waiting to be paid severance and termination pay, said Pupeza, who represents some of those workers.
“Once my guys hear about this, they‘re going to be asking about it,” he said.
Fricot and Gravelle have maintained that the best way to get everybody paid and back to work is to get the Terrace Bay mill back into production.
NDP MPP Howard Hampton, who has taken flak for raising the plight of unpaid lumber workers in the legislature, said the TBP loan is minuscule compared to the $2.5 billion in provincial financial support to General Motors and Chrysler plants in southern Ontario.
“I‘ve never been opposed to the repositioning of Ontario‘s pulp mills, which could take advantage of a market rebound if the province could get its electricity policies straight,” said Hampton (Kenora-Rainy River).
Source:
CARL CLUTCHEY
North Shore Bureau
in The Chronicle Journal
11/20/2009
