Harmac

A new bid for the bankrupt Pope & Talbot’s Harmac pulp mill for $20 million -- $6.8 million more than the employee deal of $13.2 million threatens the success of the prior offer.

An innovative plan by the union and mill management, an interior BC sawmill and a group of investors to re-open the former Pope & Talbot pulp mill in Nanaimo is threatened by both resistance from the receiver, PricewaterhouseCoopers, and the judge presiding over the case. The mill workers, who are putting up $25,000 each, interior-based Pioneer Log Homes plus Fraser Valley construction company Totzauer Holdings and an anonymous family group from Vancouver, have formed a new company called Nanaimo Forest Products. They have until August 29 to close the deal with the $13.2 million originally offered. The group is also going to need access to large capital investment for upgrades to the 60 year old mill.

A Nanaimo Forest Products company spokesperson said the group fully intends to meet the Aug. 29 deadline. The backup bid doesn’t change anything. PWC claimed in court this week that the second offer contains better terms for creditors of bankrupt Pope & Talbot, owners of the mill. PWC did not support the employee offer, and recommended at a hearing that B.C. Supreme Court Justice Donald Brenner approve the new bid as a back-up offer should the employee deal fall apart. Justice Brenner approved the NFP deal July 30, despite a recommendation from PWC that it be rejected due to uncertainties over issues such as outstanding wage claims that remain unresolved.

The new offer comes from an Alberta based real estate company, Cable Bay Lands Inc., that already owns 216 hectares of land immediately south of the Harmac mill, and is seeking municipal approvals to develop it into a golf course and 1,800- home residential community. A spokesperson maintains that the company would first attempt to reach a deal with the worker group to operate the mill before proceeding with development plans. “We have no interest in shutting the mill down, but we have no expertise to run it and no ability to go in there to do so.” Owning the Harmac site, even though environmental cleanup costs could be in the $40 million to $50 million range, would be beneficial for the development, the spokesperson said.

Pope & Talbot’s website explains that the Harmac mill was a three line Northern Bleached Softwood Kraft (NBSK) pulp mill located on the east coast of Vancouver Island near Nanaimo, British Columbia. The mill was one of Canada’s largest market pulp producers with a rated capacity of 400,000 annual metric tons. The mill had about 530 employees most of whom are represented by the Pulp, Paper and Woodworkers of Canada Local No. 8. Residents of the city of Nanaimo have expressed great dismay at the possibility of the mill being permanently shut down, and the land used for development.