Howe Sound Pulp and Paper Limited Partnership (HSPP) is back on solid ground after a B.C. Supreme Court judge issued a binding decision last Friday (Feb. 1) that forces the last of the mill's six creditors to accept the new repayment plan pitched by the mill.
"The process went as expected," said Al Strang, the mill's manager of environment and external relations. "This gives us security around our long-term financing and to carry on with our day-to-day operations."
Strang admitted relief to seeing the mill out of creditor protection that was provided under the Companies' Creditors Arrangement Act (CCAA), something he said is often viewed by those within the pulp and paper sector as a precursor to a mill's imminent demise.
"[CCAA] prevents creditors from taking action against someone they've lent money to," he explained.
The $1.3 billion debt was incurred through significant mill upgrades from 1988 to 1992, changes Strang said were needed to help the mill stay competitive today. The debt was due in February 2007, and HSPP has been working since then to restructure it.
In HSPP's case, all six lenders are Japanese banks, one of whom wasn't willing to accept the mill's plan to extend the loan period for another five years. Strang said he didn't know why that bank, which owns 12 per cent of the debt, was unwilling to agree to the mill's proposal. The new debt structure took effect on Tuesday.
