Crofton mill’s future will be determined during 73 days of complex legal work after Catalyst Paper’s financial restructuring vote failed today, CEO Kevin Clarke explained.
He reassured workers and customers it’s business as usual at the firm’s three pulp-and-paper mills as the legal picture unfolds.
“Absolutely nothing changes in their lives. The vote was narrowly voted against. We needed 66% of various classes to vote for it,” he said just after balloting by stakeholders in Richmond.
“A small group of bondholders voted against the plan.”
Failure of the floundering firm to get creditor approval for its amended plan of arrangement, under the Companies’ Creditors Arrangement Act, has left Crofton’s union spokesman Paul Zarry, and North Cowichan Councillor Al Siebring, with a wait-and-see approach.
“If the mill closes, we’ll deal with it then,” Siebring said Thursday of the mill, which paid the municipality $5.4 million in taxes.
He declined to comment about more residential-tax hikes, or spending cuts, as Catalyst struggles with its debts.
“I’d rather budget on a what-is basis.”
Zarry signalled Crofton’s 380-some members of the Pulp, Paper, and Woodworkers of Canada are worried after Wednesday’s vote failed by just 2.7%.
“The anxiety is ‘What’ll happen now?’
“(Members) could have hunkered down with some comfort, but we’re on delay again,” Zarry said of jobs, wages and pensions.
Approval of not less than 66.7% of the principal amount of each creditor class voting on the plan was required, Catalyst brass said of the vote.
“Although 99.5% of the principal amount of the secured creditor class voted in favour of the plan, only 64% of the principal amount of the unsecured creditor class voted in favour.”
Zarry said the PPWC has agreed to a five-year contract, with a 10% drop in wages and more, to help keep the mill alive.
He pegged PPWC concessions at some $36 million that could vanish from local spending.
“It’s like floating down a river on a log, and you’re not sure what side of the falls you’re on.”
Catalyst now enters what’s called the SISP, or Sales and Investor Solicitation Procedures.
“Basically, we’ve put the company up for sale — it’s very complex,” Clarke said.
Complexities include a $275-million “stalking-horse bid” for Catalyst’s mills and assets at Crofton, Port Alberni and Powell River. The stalking horse is an initial bid chosen by Catalyst and designed to set the bar for takeover.
“They’re hedge funds and large investment companies interested in companies like ours.”
But Clarke was confident in a defined legal process to take Catalyst’s customers, workers and pensioners forward.
“We’ll robustly communicate with stakeholders so we don’t have the rumour mill.
“I’m extraordinarily proud of people at Catalyst for everything they’ve done in the past six months.”
Pensioners, he said, will be given every option available.
“We want to treat them as respectfully and fairly as we can within the process.”