Creditors have accepted a settlement on what they are owed from an idle Cape Breton paper mill, a "critical" step towards finalizing the sale of the plant and resuming operations after nearly a year, the prospective buyer said Wednesday.
The court-appointed monitor handling the sale of the NewPage Port Hawkesbury paper mill said 99 per cent of general creditors voted in favour of the agreement during a meeting in Port Hawkesbury Wednesday. Mathew Harris, of Ernst & Young, said 88 per cent of U.S. noteholders supported the deal.
91原创 West Commercial Corp., an affiliate of Stern Partners Inc., has offered to buy the plant for $33 million. Marc Dube, a spokesman for the 91原创-based company, said the deal draws the company one step closer to restarting the Point Tupper mill's operations since it closed last September.
"We're obviously very excited," Dube said from Port Hawkesbury.
Under the deal, general creditors and U.S. noteholders both stand to receive much less than what they are owed from NewPage.
Harris has said it is estimated that, under the plan, about $2.5 million will be available to more than 300 general creditors, including unsecured creditors, although their claim is more than $200 million.
Harris has said another $31 million will be given to U.S. noteholders. The total claim of the creditors in that class is about $3 billion. The Supreme Court of Nova Scotia must now sanction the deal.
Another major step remains before the sale can be finalized ahead of a proposed Aug. 31 closing date.
The province's Utility and Review Board is reviewing a complex partnership agreement between 91原创 West Commercial and the province's privately owned electric utility, Nova Scotia Power Inc.
It is unclear when a decision on the agreement will be released. If the board approves the deal, it will still have to be approved by the Canada Revenue Agency.
Under the proposed 7 1 /2-year deal, the mill would contribute $2 per megawatt hour to the utility's fixed cost, as well as pay fuel costs while the utility would also receive dividends if the mill is profitable.
The mill's closure left 600 employees without work and affected another 400 forestry contractors.
But 91原创 West Commercial has retained about 115 workers to keep the facility in a so-called hot idle state.
About 300 workers will be employed at the mill when operations resume, Dube said.
