B.C. judge grants Northern Pulp more time to prepare sales process

A judge in British Columbia has granted an extension to Northern Pulp's creditor protection until the middle of July, when lawyers for the company expect to present the court with details of a sales process.

Justice Shelley Fitzpatrick granted the company's request after a short hearing in B.C. Supreme Court on Friday during which a lawyer for Northern Pulp explained that multiple parties have expressed interest in submitting a bid on assets, but there was not enough time to work through negotiations before the May 2 deadline.

Lance Williams told the court the extension would allow the company to focus on a so-called "no mill scenario" after a feasibility study concluded a proposed $2.5-billion new mill in Liverpool, N.S., could not generate a required rate of return greater than 14 per cent.

In that scenario, outlined as part of a settlement agreement mill officials signed with the Nova Scotia government last year, the company will prepare a process to sell its timberlands.

If the company goes that route — "which it appears we will be," Williams told Fitzpatrick — the parties would be back before the judge on July 18 seeking approval of the sales process.

Williams said how the mill assets at Abercrombie Point in Pictou County will be dealt with is subject to ongoing discussion. He said the parties will have a clearer view of that issue when they return to court this summer.

'The door's not shut'

Although the parties are moving ahead with the no mill scenario, Williams told the court that officials with the company and the Nova Scotia government are pursuing other funding options that might help achieve the guaranteed rate of return necessary to make the proposed project in Liverpool viable.

In the lead-up to the recent federal election, Premier Tim Houston wrote letters to Liberal Leader Mark Carney and Conservative Leader Pierre Poilievre outlining priorities for the province that he'd like to see the federal government focus on. Included on that list was financing from the Canada Infrastructure Bank for a new mill.

Houston told reporters earlier this week that he believed company officials were also exploring financing through private and traditional lending channels. He said the company, owned by Paper Excellence Group in British Columbia, has not asked the province for financial support.

"The door's not shut, essentially, if it's possible to find sufficient funding," Williams told the court.