Paper Excellence Canada and Nova Scotia Reach Settlement on Shuttered Northern Pulp Mill

On Thursday, Paper Excellence Canada announced that it has reached a settlement with the Province of Nova Scotia that acknowledges plans to transform and reopen Northern Pulp Nova Scotia in Pictou will not proceed and provides for a review process agreed upon between the Northern Pulp group and the Province of Nova Scotia that is aimed to determine whether a new, modern mill in Nova Scotia is viable.

The agreement also provides for the settlement of outstanding litigation and loans between the two parties and fully addresses the pensions of former mill employees. The settlement agreement is subject to approval by the Supreme Court of British Columbia.

According to the press release, central to the settlement agreement is the creation by the Northern Pulp group (a subsidiary of the Paper Excellence group) and the Province of Nova Scotia of a review process that will explore the feasibility of a new, modern mill in Liverpool, Nova Scotia. Paper Excellence Canada will fund this review process and will work in close consultation with the Province of Nova Scotia in undertaking a feasibility study to determine whether a viable business case exists to open a new mill there.

The potential construction of a state-of-the-art northern bleached softwood kraft (NBSK) pulp mill therefore depends on a determination of viability under this study.

If a new mill is viable, the Northern Pulp group will seek third-party project financing to design, construct, and operate it. Northern Pulp will also pay the province $15 million to fully resolve previous woodlands-related debt and will continue to own the woodlands.

If a new mill is not feasible, the Northern Pulp group’s assets in Nova Scotia will be sold in a managed process. The proceeds from the sale will be used to repay the debtor-in-possession financing incurred throughout Northern Pulp’s CCAA process, fund and wind-up pension plans, and contribute to cleanup costs. Any funds remaining will go to the province to repay the debts owed to it.