By IAN ROSS
A local ownership group looking to re-open the shuttered Cascades mill into a specialty paper mill is already looking for employees.
Spokesman Andre Nicol for Thunder Bay Fine Papers says closing the complex deal with Cascades Inc. has taken longer than expected, but the banking documents are mostly done and some final details with government loan guarantees on equity side are still be ironed out.
“We’re getting very close,” says Nicol, “but until it’s done how you do know when it’s going to be operating?”
Still, the ownership group began posting ads for supervisory positions this fall.
With the forest industry struggling in northwestern Ontario, Nicol says there’s no shortage of public interest and they’ve collected a fair number of resumes.
“We want to be ready for start-up.”
The Thunder Bay group has a purchase agreement with Cascades finalized and have raised more than 80 per cent of the equity required to re-open the facility.
The total package of financing needed to operate the mill is about $43 million through a combination of government loan guarantees and equity.
The group is headed by Dennis Bunnell, who served as the last president of Provincial Papers, an employee-run predecessor company prior to the mill’s acquisition by Quebec-based Cascades in 1997.
Nicol will serve as vice-president of sales.
He was part of a group formed in 2005 when Cascades announced it was closing the mill. The Quebec company attributed the closure to high energy costs, the strong Canadian dollar and unfavourable market conditions. The mill closed in February 2006.
Just before the election, Queen’s Park committed a $1.5 million grant and a conditional loan guarantee of $12.7 million.
When operational, the company plans to produce 200,000 tonnes of coated paper annually.
The mill will produce high-end coated printing paper for glossy advertising promotional material, magazines and text books, known in the industry as No. 2, 3 and 4 coated paper.
Nicol says there also seems to be demand for wallpaper stock since many companies have abandoned that product.
The three paper machines have been shut down for a year-and-a-half and Nicol admits he has no idea what the maintenance requirements will be once the machines are powered up in phases.
With another winter approaching, Nicol says, “we’ve got to do this now. I think it’s going to happen. We haven’t got to the closing at this point, but it’s very close.”
He’s hopeful the plant can start producing paper by late February.
There’s obviously no order book but the markets for this kind of paper are “extremely good.”
“We believe we can sell the product at fair market value at start-up.”
An earlier deal, with an investors group fell through at the end of January after many months despite a letter of intent being signed.
The group then arranged $25 million in financing for capital upgrades and operating funds through Ernst & Young Orenda Capital Finance Inc.
Nicol says no environmental clean-up will be necessary, since the mill was in environmental compliance when it closed.
The group has a memorandum of agreement with the plant’s four unions, the CEP being the largest at 340 members.
