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Paper Excellence Canada and Nova Scotia reach settlement over Northern Pulp mill future

Agreement halted Pictou mill redevelopment, initiated feasibility study for new mill in Liverpool, and addressed employee pensions and outstanding legal claims

Paper Excellence Canada has reached a settlement with the Province of Nova Scotia, effectively halting plans to transform and reopen the Northern Pulp Nova Scotia mill in Pictou. The agreement, which awaits approval by the Supreme Court of British Columbia, outlined a review process to explore the viability of constructing a new, modern mill in Liverpool, Nova Scotia.

The settlement includes provisions for the settlement of outstanding litigation and loans, and fully addresses the pensions of former mill employees. The Northern Pulp group, a subsidiary of Paper Excellence, will collaborate with the Province of Nova Scotia to conduct a feasibility study for the potential new mill. Paper Excellence Canada will fund this review process.

A key aspect of the agreement is the feasibility study to determine if a state-of-the-art Northern Bleached Softwood Kraft (NBSK) pulp mill is viable. Should the study find the project feasible, the Northern Pulp group will seek third-party financing to design, construct, and operate the new mill. As part of the agreement, Northern Pulp will pay the province $15 million to resolve previous woodlands-related debt and retain ownership of the woodlands.

If the feasibility study concludes that a new mill is not viable, Northern Pulp’s assets in Nova Scotia will be sold. The proceeds from the sale will be used to repay financing incurred during Northern Pulp’s Companies’ Creditors Arrangement Act (CCAA) process, fund and wind-up pension plans, and contribute to cleanup costs. Remaining funds will go to the province to repay its debts.

The Pictou site will remain in “cold hibernation” during the feasibility study, with Northern Pulp Nova Scotia continuing to comply with its obligations under existing ministerial orders, environmental laws, and regulations, while providing ongoing care and maintenance of the site.

The settlement ensures that, irrespective of the feasibility study’s outcome, pensions for current and former Northern Pulp Nova Scotia employees will be fully funded and obligations discharged.

In resolving all outstanding legal claims, Paper Excellence will withdraw its lawsuit against the province and settle debts under the settlement agreement terms. This resolution paves the way for a collaborative future between Paper Excellence and the Province of Nova Scotia.

The British Columbia Supreme Court will hear the request for approval of the settlement agreement on May 31, 2024.

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