Mill getting $25M

The province will give Terrace Bay Pulp a vote of confidence in the form of $25-million, a mill official told media Thursday.

The province hasn’t made an announcement yet, but Yves Fricot, a lawyer for the Buchanan group of companies, said the province indicated it is prepared to support the mill through a $25-million term loan. The loan is expected to help the mill complete financing, make arrangements with creditors and eventually re-open operations.

"This vote of confidence from the government allows us to go with a good degree of confidence to the credit markets to say ‘look we need your help on the second half of this piece,’" Fricot said. "This is a good mill and we have some people who believe in it."

Fricot said the company hopes to open the mill sometime early in 2010. But despite the announcement of a possible loan, Fricot added that it was too early to give the facility a specific restart date.

"I really don’t want to pin down a date because I think that would be unfair to the (workers)," he said. "But we are looking at early in the new year."

The mill was idled in February and was forced to seek CCAA protection on March 11. The company has had its creditor protection extended a couple of times by the courts.

Recently, union officials representing workers at the Terrace Bay mill said it was time to reopen the mill and get workers back on the job. Both company and Steelworker Union officials argued that mill was viable because the price of pulp had risen by nearly $300 per tonne since being idled.

Fricot said the market conditions surrounding the pulp industry are different today than they were a year ago. A year ago, people who typically lent money into the forestry industry suddenly were not making the investments because of the global market conditions.

Now pulp prices have begun to pick up and some economic forecasts show pulp prices remaining strong in the short-term. In the long-term, Fricott said the company has the ability to now go back to the credit market with a pitch that pulp is a good investment.

The state of the mill in Terrace Bay will also help the company in the future, he added.

"It’s a world-class mill with a world-class labour force," he said. "It is able to produce pulp in world-class volumes. So it has all of the tools necessary to be successful in the long-run and if it was operating today it would be making money."

Dougall Media contacted Minister of Forestry Michael Gravelle, however, a spokesperson for the minister said Gravelle would not be able to comment on the deal until Friday morning.

The exact terms of the loan are not publicly known at this time. Click here to submit a letter to the editor.