A buyer is being sought for the troubled St. Marys Paper Corp. in Sault Ste. Marie, which went into receivership Dec. 29.
Alex Morrison, a senior vice-president for Ernst & Young, the court-appointed firm chosen as receiver and manager for the 110-year-old paper mill, said once the process gets underway, change will happen quickly.
According to a decision from the Ontario Superior Court of Justice, a number of options are available to Ernst & Young in handling the mill's assets, including continuing the business as usual, selling the property, or liquidating its assets.
Morrison said the Toronto firm has yet to determine what course of action it will follow, but estimated a decision would take place this month.
“I think what we'll end up doing is running a sale process to see what bidders are available for the company, and that will be done probably over the next couple of weeks,” Morrison said. “We'll start, and then we'll see what comes out of that.”
According to local media reports, St. Marys went into receivership at the behest of stakeholder International Forest Productions Corp. after the mill was unable to retain insurance.
While Morrison didn't have the details behind the withdrawal of insurance for the mill, he pointed to the mill's long-time financial and operational woes as the likely culprit.
“I'm not sure exactly the circumstances around the insurance coverage issue, but I think it was probably more of an issue of its financial condition and the insurance carrier being concerned about continuation of coverage,” he said. “But I don't have the full details on that.”
The mill has been closed since April, when, in a letter to employees, management said repairs were being made to its No. 5 supercalendar paper machine and indicated efforts were being made to recapitalize the operation. A financing partner was being sought out to construct a co-generation plant for the mill, and a July startup date was cited.
The mill never reopened, however, and local media reports suggested customers had sought out other producers during the downtime at St. Marys.
Morrison said the firm's staff are currently on site looking after its assets, and any interest that emerges out of the sale process will determine the next steps. After just a week in receivership, Morrison said the firm has yet to hear any expressions of interest.
“It's still too early,” he said. “It really only happened last Friday, and we will be formally running a sale process very soon and I expect the interest will come out of that process.”
Any stakeholders who are owed money will have to wait for any compensation for their investments, however.
“Right now (the mills assets) are all frozen by the court order appointing us as the receiver, and then once we sell the assets or the business, the proceeds that come from that will be available to the stakeholders who were owed money based on their legal priorities, in terms of who has first crack at the money,” Morrison said.
