Catalyst Paper Corporation posted a net loss of almost $1 billion in 2011, due in large part to writing down the value of its four pulp and paper mills.
The net loss of $974 million includes $660 million of asset impairment, explained Stew Gibson, interim general manager of the Powell River division, during the February 29 meeting of the company’s community stakeholders committee. “That’s a very significant loss,” he said. “That really describes our business right now.”
One part of the company’s business that had been generating cash was the pulp mill in Crofton, Gibson said. “Chinese markets have slowed and that revenue has diminished,” he said.
Catalyst has been going through a restructuring process under court protection from creditors through the CCAA (Companies’ Creditors Arrangement Act). The filing came after the company failed to win support from enough of its lenders and from unionized workers at its mill in Crofton, who rejected contract concessions.
Catalyst has secured up to $175 million in debtor-in-possession financing from JP Morgan during the CCAA process. The BC Supreme Court has granted creditor protection up until the end of April. The order was recognized in the United States under Chapter 15 of the bankruptcy code.
Paper markets are projected to continue to be soft in the future, Gibson said. “As a division, our obligation is to do what we can to be competitive. We’ve got some work to do on that. Our cost structure is not where it needs to be. We’ll continue to pursue what’s necessary to be competitive.”
However, his outlook for the division continues to be positive, Gibson added. “We have some nice assets. I’m still a believer that we have the right mix, that the products we produce today will be products that will be consumed years from now.”
The G12 project, an electrical upgrade for which the company received $13.3 million from the federal government’s pulp and paper green transformation program, is online now, Gibson said, four months ahead of schedule. The project increases the output of the G12 steam generator by about 15 megawatts and involved the installation of a steam condenser on the generator, as well as new waste-wood handling equipment, a sand recycling system and upgrades to Power Boiler 19.
As well, Gibson said, an expansion to the Wildwood landfill was one of the few capital projects approved by the board of directors for 2012. “The engineering is proceeding,” he said. “At this moment in time, we are advancing that project.”
