Catalyst Paper Corporation creditors approved an amended restructuring plan on Monday, June 25. Unsecured creditors voted 99.07 per cent in favour of the restructuring plan and 99.25 per cent of the secured creditors voted in favour of it. Votes were cast in person and by proxy at meetings held in Richmond.
City of Powell River Mayor Dave Formosa was there for the vote. He said the result was “great news” and he was very happy. “When you go to the car races and the track official is ready to shoot his gun for the start, he says, ‘Gentlemen, start your engines.’ I say, millworkers and pensioners, start spending, because the community sure needs it. I’m hoping that we see people more relaxed, we see this anxiety over the mill gone, because it should be. The mill is now in a very good financial state.”
Catalyst entered into creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in January.
Creditors voted down a first restructuring plan by a narrow margin on May 23. Since then, the company has been in a court-approved sale and investor solicitation procedure.
One of the key changes in the amended plan was that salaried pensioners dropped some of their health benefits and had a vote along with other unsecured claims on the second vote.
“We have received support from a majority of stakeholders since we began the reorganization process and today’s vote of support by creditors for the second amended plan of arrangement sets out a clear path forward,” said Kevin Clarke, Catalyst president and CEO in a statement. “With the cooperation of employees, vendors, customers, pensioners and investors, Catalyst has been able to make progress through a very complicated situation at an unprecedented swift pace.”
The plan puts Catalyst on a stronger financial base to compete and adapt as the marketplace for its products continues to change, Clarke added. “We’re now turning our attention to securing our exit financing and satisfying the remaining conditions of the plan with a target timeline to emerge from creditor protection in the near term.”
Catalyst has received BC court approval to extend the period of CCAA protection to September 30.
The sanction hearing under the CCAA process is scheduled to take place on Thursday, June 28 in the Supreme Court of BC. Pending court approval, the confirmation hearing under the Chapter 15 process of the United States court in Delaware is expected to take place in mid-July.
Catalyst will come out of CCAA “much, much stronger, profitable, lean and ready to face this economy,” Formosa said. “That’s good for our community.”
Mike Verdiel, president of Local 76 of the Communications, Energy and Paperworkers’ Union of Canada, was also in Richmond for the vote. “It’s very good news for everybody,” he said. “Hopefully, it will settle people down.”
The economy in all three communities where Catalyst has operations—Port Alberni and North Cowichan as well as Powell River—has been affected, Verdiel said. “Pensioners, everybody has been holding back, waiting to see what happens,” he said. “We’ve been having recruitment issues so I think as we try to recruit people, it should be helpful with getting this behind us.”
The mill will be hiring some labourers in the next few weeks, Verdiel said. “We just got approval and the posting should be going up,” he said. “We’re going to be starting some new apprentices. It’s good news and bright lights coming, after what we’ve been through.”
Verdiel also said that Formosa has done a great job as mayor. “He worked for the community,” he said. “I’ve appreciated the work that he’s done. He’s been actively involved and it’s been in a very positive way.”
Formosa was able to use his influence to help obtain meetings with the provincial government, as well as working with pensioners and helping behind the scenes to get the second vote, Verdiel pointed out. “He deserves credit for helping pull the thing through.”
BC’s cabinet approved an order in council for proposed changes to Catalyst’s salaried pension plan that provide more time for the company to restore the deficiency in the pension fund, estimated to be $115 million, and allow pensioners to cash out their benefits.
