Developments in Catalyst Paper Corporation’s journey through creditor protection occur on an almost weekly basis. The announcement yesterday that the company is seeking support for an amended restructuring plan that hopefully will be presented to secured and unsecured creditors for a second vote instills optimism for many.
The first vote failed by the narrowest of margins. Many believe Catalyst’s best way out of creditor protection is through financial restructuring.
Salaried employees and pensioners have a significant interest in what happens to the company. There is a $115-million deficiency in the company’s pension plan, which means if the company is sold or goes bankrupt, pensioners stand to lose 30 to 35 per cent of their pensions. However, pensioners couldn’t participate in the vote on the restructuring plan, despite the fact they are owed a significant amount.
To help facilitate a second vote, pensioners have offered to give up health plan benefits, estimated to be worth in the tens of millions of dollars. That reduces Catalyst’s debt load and makes the restructuring plan more palatable to creditors. The compromise also involves giving the pensioners groups a vote, if there is sufficient support for a new amended plan and the judge approves a second vote.
Meanwhile, the province is actively working on measures that could assist Catalyst. Provincial officials have to tread carefully, as the government can’t support one company and not others.
Clearly, the company is not seeking a bailout, nor are the communities who have approached the government seeking assistance for the company asking for a bailout. But representatives from Catalyst, unions, pensioners and communities have asked the province to work with the company to find solutions.
Why should the government actively work on this request? Because Catalyst employs 1,700 people in well-paying jobs, supports an estimated 7,000 indirect jobs in coastal communities and generates $2 billion a year in economic activity.
As well, by showing a willingness to work with Catalyst, the government is sending a message to creditors, who ultimately hold the company’s fate in their hands. They will decide if the company survives, along with those jobs.
The government did respond, by appointing MLA Colin Hansen, former finance minister, as the point man for pensioners, unions and communities, and the deputy minister of finance as the contact for Catalyst.
All of these initiatives are contributing to realizing the best possible outcome for Catalyst, which in turn will benefit the communities where it operates.
