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Northern Pulp’s owners are approved for a $50 million loan to keep the company functioning while under creditor protection.
Forty-million dollars of the loan comes from Pacific Harbour Group, an Asian asset management firm, and $10 million comes from Northern Pulp parent company Paper Excellence Canada.
The loan, referred to in an affidavit filed Tuesday by Northern Pulp general manager Bruce Chapman, would allow the owners of the Pictou County kraft pulp mill to keep paying their bills past July 25 – when the money they have in the bank runs out.
Northern Pulp idled its mill in January after Premier Stephen McNeil refused to extend the Boat Harbour Act, which mandated the closure of the provincially owned effluent treatment plant leased by the mill.
Northern Pulp’s attempts to build a replacement have been frustrated by widespread opposition from fishermen, the Pictou Landing First Nation and private citizens concerned about its potential environmental impact on the Northumberland Strait.
“Given the complicated nature of the assets, the length of the commitment and the general uncertainty involving the development and completion of the (proposed effluent treatment plant), the assets are very difficult to finance,” stated Chapman.
“The Petitioners have not been able to identify alternative proposed lenders who are prepared to provide funding on more favorable terms.”
Chapman’s affidavit was filed for a hearing scheduled for this Friday during which the companies that are jointly responsible for the Northern Pulp kraft pulp mill and its tens of thousands of hectares of woodlands will seek an extension of the creditor protection granted to them two weeks ago by the British Columbia Supreme Court.
The companies names are 157863 B.C. Ltd, Northern Resources Nova Scotia Corp., Northern Pulp Nova Scotia Corporation, Northern Timber Nova Scotia Corporation, 325327 Nova Scotia Ltd., 3243722 Nova Scotia Ltd. and Northern Pulp NS GP ULC.
According to the latest tally provided to the court, the companies jointly owe $311,019,411.
Just over $86 million of that is owed to the province while $213 million is owed to parent company Paper Excellence.
The remaining $13.2 million is owed to the 335 employees laid off earlier this year in the form of severance ($7.12 million) and to over 200 forestry contractors, land owners and service providers to the mill.
Those creditors, however, are all unsecured – meaning in a typical creditor protection case they are at the bottom of the list to get paid.
In announcing that it had filed creditor for protection in June, Northern Pulp stated that it intended to “satisfy its obligations to employees, service providers, suppliers, contractors, and retirees.”
Chapman’s affidavit on Tuesday wasn’t quite as clear on that note.
“(Northern Pulp is) continuing to assess whether they will require either a critical vendor charge or authorization to make pre-filing payments to (unsecured) vendors at the Comeback Hearing,” states Chapman.