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Resolute's 'backstop' agreement opens path to Fort Frances mill demolition

The company says it will entertain 'binding offers' from other parties untill March 15.
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Fort Frances mill (Tannis Drysdale photo)
The Resolute mill in Fort Frances has been shut since 2014 (Tbnewswatch file)

FORT FRANCES, ON — Resolute Forest Products has signed what it calls a "backstop agreement" to sell its Fort Frances mill property.

A letter from the company to the town discloses what councillor Douglas Judson describes as Resolute's "default intention" to sell its local assets to "a community redeveloper" which would then demolish the mill.

In the letter to Mayor June Caul, the company says the agreement was necessary in order to "crystallize the terms" it negotiated with the buyer and to secure its funding commitment.

It states that the final transaction would close no earlier than May, and that, in the interim, Resolute is running a parallel process in which other interested parties must prepare binding offers for the mill by March 15, 2019.

Judson, in an emailed statement to news media, said he has "little confidence" that the open bidding process announced by Resolute is intended to result in a sale to an operator that would want access to wood fibre in the Crossroute Forest.

Fibre from the Fort Frances-area forest previously supplied the local mill, and now feeds other Resolute operations in northwestern Ontario including in Atikokan, Ignace and Thunder Bay.

So far, the only publicly-disclosed interest in buying and reopening the mill has come from Repap Resources, an unincorporated private six-member investment group.

Judson wants town council to pass a resolution that criticizes Resolute for "dealings motivated by a desire to maintain control of the local wood supply or to hinder new entrants to the forest industry."

According to Judson, the company's requirement for buyers such as Repap to enter into a non-disclosure agreement prohibits them from approaching Ontario government officials about access to a wood supply.  

Resolute:  Repap Resources is being 'cruel' by creating unfair expectations 

Resolute's spokesperson, Vice-President Seth Kursman, responded forcefully to the accusations in an interview Monday with Tbnewswatch. pointing a finger instead at Repap.

"In order for us to exchange documents and to provide them with information, they would need to sign a standard-form non-disclosure agreement," Kursman said.

They refused to meet that requirement, he said, during a one-hour meeting at Resolute's headquarters in Montreal before Christmas.

Since then, according to Kursman, there have been no negotiations with Resolute, but Repap has been negotiating with "others."

Repap has held talks with politicians and community leaders and with Unifor, the union that represented workers at the mill.  

"If they refuse to even sign a non-disclosure agreement, then they won't even be a party to this process," Kursman warned. "They're going to follow basic protocols for how these things are done," otherwise "they're not getting any information."  

Kursman went on to chastise Repap for "creating inappropriate, unfair expectations" in Fort Frances about a mill re-start before an information exchange with Resolute.

"It's just downright cruel to create expectations that are unlikely to be met."

Kursman said his company showed good faith by spending $35 million to keep the mill in a "hot idle" state  after it was closed and while it explored "all available options...literally speaking to parties all around the world."

After determining that any return to manufacturing operations was "highly unlikely," he said, the focus over the past year has been on a community development approach emphasizing environmental stewardship of the mill site.

He said the company has heard from a number of groups in the Fort Frances area including First Nations and non-profits that have ideas for using some of the former mill facilities.

When asked how important it is for Resolute to retain its existing fibre sources, Kursman said the company needs access to "cost-competitive fibre" for all its northwestern Ontario facilities.

"Taking fibre away from Resolute will only lead to the potential closure of other operations," he said, pointing to similar concerns about fibre access that have been expressed by other companies around the region.

"We have a big footprint in northwestern Ontario...you can be sure that there is a domino effect."

Repap spokesperson Sean Twomey has said he and his partners want to reconfigure the mill to produce the kind of paper used for sugar bags and cement bags.

In a phone interview Monday from his office in New York, Twomey said his group had made "simple proposals" to Resolute to address the confidentiality issue, and that he is confident the parties will reach a mutually acceptable agreement about that.

Twomey also indicated he believes Repap can meet the March 15 deadline for a binding offer.

 



Gary Rinne

About the Author: Gary Rinne

Born and raised in Thunder Bay, Gary started part-time at Tbnewswatch in 2016 after retiring from the CBC
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