Northern Pulp seeks more time to determine its future in Nova Scotia

Officials with Northern Pulp have filed paperwork requesting an extension of the company's creditor protection as they seek to determine if there is a viable future for the operation in Nova Scotia.

The application, which will be heard Friday in British Columbia Supreme Court, would extend the stay of proceedings until July 18.

"The company will use this time to further advance preparations for a potential sale of its assets, should a new mill not be feasible," a spokesperson said in a statement.

"Additionally, Northern Pulp will continue discussions with various stakeholders and rights holders regarding the feasibility of establishing a new bioproducts hub in Liverpool."

The company has previously said the site could include the production of bleached softwood kraft pulp and perhaps products such as biogas and biochemicals for other products.

Court filings on Thursday, however, raise the question of how likely such a scenario would be and whether it would even include Nothern Pulp.

An affidavit from Carlo Dal Monte, vice-president of legacy assets for Northern Pulp parent company Paper Excellence Canada, says that since March the company received expressions of interest in submitting a bid for the mill's assets.

"However, this past stay extension did not provide sufficient time for the parties to take the steps to determine whether a stalking horse agreement was possible, and if so, which party would be the stalking horse bidder, and to draft the necessary agreement and bidding procedures."

A stalking horse bid is a pre-negotiated offer to purchase the assets of a company.

Dal Monte says extending the stay would preserve the status quo while all parties interested prepare and submit bids and, if multiple bids are submitted, determine which should be put before the court for consideration.

"The petitioners believe a stalking horse bid, if available, provides a level of stability for the petitioners and their stakeholders because the petitioners' employees, suppliers, and customers have comfort that the sales process will result in a successful going-concern sale and therefore a continuation of the petitioners' business."

A statement from Natural Resources Minister Tory Rushton said the provincial government would not oppose the application or file any additional paperwork.

"Our interest all along has been finding new opportunities for our forestry sector and natural resources," Rushton said in the statement.

"We know a new pulp mill would create long-term benefits for the sector and our provincial economy. If a new mill doesn't happen under the terms of this settlement agreement, there are already other opportunities developing to keep our forestry sector strong."

About a year ago, the company and provincial government announced the settlement agreement that ended years of legal wrangling and brought to a close the tumultuous history of the pulp mill's operation in Pictou County.

At the time, it was announced that the focus would shift to conducting a feasibility study to consider if building a new operation in Queens County would be viable.

In March, company officials announced that the result of the study showed that a new bioproducts hub would cost $2.5 billion and require private and public funding. At the time, officials said that plan did not meet the required rate of profitability, set at greater than 14 per cent. Efforts to secure financing were extended until May.

With that date about to pass and the company now seeking more time, Premier Tim Houston told reporters on Wednesday that having a mill in Nova Scotia is important to the province's forestry sector and he hopes it comes to pass.

But the premier stopped short of saying whether his government would contribute toward that effort beyond the usual economic development measures such as the capital investment tax credit, which tops out at $100 million, and payroll rebates.

"It's not something I've been asked to do," he said. "If I'm asked to do [it], I'll assess it."

Opposition questions using public money

Houston said it's his understanding that a new mill could be viable even without government assistance.

"It would be a new modern mill, so it would be an expensive undertaking and I understand that they're looking at how that can be financed with private money, through traditional lending."

NDP Leader Claudia Chender said she would have to see a proposal and the numbers to know whether it would make sense to put public money toward a new mill operation in Liverpool.

"We know that if creditor protection goes forward, the province is going to have a financial liability," she said in an interview.

Chender said it comes down to what the company is asking for, how it would benefit the province, how many jobs might be created and what environmental safeguards would be in place.

"And does it make sense for Nova Scotia communities, certainly for the community where it would be located, and does it make sense for Nova Scotia taxpayers."

Interim Liberal Leader Derek Mombourquette said the ideal scenario is that the business case for a new mill would not require public money.

"What I think government should be doing is setting the right conditions so that private sector comes and makes the investments in our province," he told reporters.

Northern Pulp's operation at Abercrombie Point in Pictou County shut down in 2020 after the company failed to secure environmental approval to construct a new effluent treatment facility to replace the one at Boat Habour, a former tidal estuary the government of the day committed to restoring for neighbouring Pictou Landing First Nation.