Terrace Bay Mayor Mike King said he’s relieved that his community has weathered the 19-month closure of its largest employer.
The Buchanan Group announced on Thursday that late the night before the company was officially taken out of creditor protection, meaning up to 340 workers will be called back to the plant, the town’s main employer, and in fact, it’s reason for being.
“We finally seem to be coming out of this thing,” said King, reached by phone.
The impact of the return of the mill – which Buchanan Group officials say contributes as much as $1.4 billion to the regional economy – cannot be underestimated, added King, who earlier this month was acclaimed for another term as mayor of the North Shore community.
“Terrace Bay was essentially carved out of the wilderness to be the community to house the pulp mill, back in the ‘40s. It is really whole reason that Terrace Bay came into being,” King said. “It’s a very significant part of our community. We’ve always maintained that it’s one of the more modern mills in the area, and it was always a good mill.
“Of course the economic situation that came about, with the essential almost collapse of the forest industry had a serious impact on us.”
The deal, finalized on Wednesday night, centres around nearly $30 million in investment capital provided by Callidus Capital Corporation, which ensures a $25-million loan from the province of Ontario that hinged on the company’s ability to secure its own financing to pay off nearly $35 million Terrace Bay Pulp owes to 168 creditors.
Yves Fricot, general counsel for the Buchanan Group, said it wasn’t easy securing the financing, given the country’s fiscal situation, especially in the pulp and paper business.
“We have the advantage is that everybody has looked at the mill has come to the same conclusion that we have, that it’s a world-class facility that we’re able to produce pulp at very competitive prices. But the challenge has always been that people are very reluctant to invest in forest products in this climate,” Fricot said.
“Calldius came to the table at the end and took a very businesslike approach to the future of the mill and it was very refreshing and a very positive experience for us. We did a lot of work in a very short period of time and we were able to complete the financing piece.”
Fricot said barring any last-minute obstacles, the company hopes to begin producing pulp by the first week of October, and that laid-off workers have already started being recalled to get the plant ready for production.
Woodlands operations related to their fibre supply, estimated at about 1.8 cubic meters of timber annually, will also commence immediately, Fricot said.
Fricot is convinced the conditions that plagued the mill in the past have been corrected, with the exception of the high Canadian dollar.
However, diversification should solve this problem, he said.
“There’s no sign of anything similar coming at us. Pulp prices are at an all-time high (about $900 a tonne) and rather than just focusing on the North American market, what we’re now doing is we’ve diversified our sales. We’re selling a significant chunk of our product to Europe and to Asia, so that we have both high prices, a different mix and a different economic environment.
“When you put all that together, we’ve got a very sustainable picture.”
The Buchanan Group announced on Thursday that late the night before the company was officially taken out of creditor protection, meaning up to 340 workers will be called back to the plant, the town’s main employer, and in fact, it’s reason for being.
“We finally seem to be coming out of this thing,” said King, reached by phone.
The impact of the return of the mill – which Buchanan Group officials say contributes as much as $1.4 billion to the regional economy – cannot be underestimated, added King, who earlier this month was acclaimed for another term as mayor of the North Shore community.
“Terrace Bay was essentially carved out of the wilderness to be the community to house the pulp mill, back in the ‘40s. It is really whole reason that Terrace Bay came into being,” King said. “It’s a very significant part of our community. We’ve always maintained that it’s one of the more modern mills in the area, and it was always a good mill.
“Of course the economic situation that came about, with the essential almost collapse of the forest industry had a serious impact on us.”
The deal, finalized on Wednesday night, centres around nearly $30 million in investment capital provided by Callidus Capital Corporation, which ensures a $25-million loan from the province of Ontario that hinged on the company’s ability to secure its own financing to pay off nearly $35 million Terrace Bay Pulp owes to 168 creditors.
Yves Fricot, general counsel for the Buchanan Group, said it wasn’t easy securing the financing, given the country’s fiscal situation, especially in the pulp and paper business.
“We have the advantage is that everybody has looked at the mill has come to the same conclusion that we have, that it’s a world-class facility that we’re able to produce pulp at very competitive prices. But the challenge has always been that people are very reluctant to invest in forest products in this climate,” Fricot said.
“Calldius came to the table at the end and took a very businesslike approach to the future of the mill and it was very refreshing and a very positive experience for us. We did a lot of work in a very short period of time and we were able to complete the financing piece.”
Fricot said barring any last-minute obstacles, the company hopes to begin producing pulp by the first week of October, and that laid-off workers have already started being recalled to get the plant ready for production.
Woodlands operations related to their fibre supply, estimated at about 1.8 cubic meters of timber annually, will also commence immediately, Fricot said.
Fricot is convinced the conditions that plagued the mill in the past have been corrected, with the exception of the high Canadian dollar.
However, diversification should solve this problem, he said.
“There’s no sign of anything similar coming at us. Pulp prices are at an all-time high (about $900 a tonne) and rather than just focusing on the North American market, what we’re now doing is we’ve diversified our sales. We’re selling a significant chunk of our product to Europe and to Asia, so that we have both high prices, a different mix and a different economic environment.
“When you put all that together, we’ve got a very sustainable picture.”
