B.C. Liberals' inaction hurting Catalyst mills: CEO
May 29 2012
Port Alberni's Catalyst paper millPhotograph by: Julia Caranci , Alberni Valley Times
The head of Catalyst Paper believes the provincial government could have done more to help the company stay afloat.
Catalyst CEO Kevin Clarke has suggested that lack of government help for his struggling company may have contributed to the defeat of a restructuring plan last week.
Clarke raised the point in a letter to Premier Christy Clark in advance of a meeting today between Catalyst and provincial officials.
The future of the company and its three coastal pulp and paper mills is up in the air after the narrow vote against the plan.
A majority of ballots cast by creditors favoured the plan. But measured by value of debts, the plan fell just short of the required two-thirds approval. As few as one or two unsecured creditors held enough debt to prevent reaching the threshold.
Although pensioners and others are urging a revote, the company is putting itself up for a sale that is fraught with uncertainty.
Clarke's letter, obtained by the Times Colonist, said: "Premier, absent a public statement of confidence in the company from B.C. government leaders, and action to back it up, some investors may have taken this as a cue to vote down the plan."
Clarke said that despite many letters and meetings, his request that the government help "set right the fundamentals" went unheeded. "The lack of substantive and public action by the B.C. government on the items identified for its attention was disappointing," he wrote.
Clarke singled out Jobs, Tourism and Investment Minister Pat Bell, saying his public assertions that he and the government were working with the company "simply were not true."
The letter was dated the day after the vote on the restructuring plan failed and lists areas where action is wanted, including pension changes, PST rebates and training tax credits.
"This week's vote was upsetting to many thousands of British Columbians and their families," the letter said. "I hope that with this letter we can put an end to the actions that have hindered progress, and work together to demonstrate - that 7,000 jobs and $2 billion in economic activity is valued, desired and worth fighting for."
Any decisions from today's meeting could make a difference in the viability of operating the company in its current form.
That would be much more certain if the plan had been passed, which is why some are calling for another vote. Gary McCaig, who is involved with a group of Catalyst pensioners, is urging a second try.
Pensioners were originally determined to be unaffected creditors, meaning their interests were not affected by the company's entering creditor protection last January. McCaig, from Port Alberni, said that looked good on the surface, at the time. But it meant they didn't get a vote last week, despite their fund holding a $115-million liability. And now that the plan has failed, that liability will translate to a 35 per cent cut in individuals' pensions.
McCaig said pensioner groups are examining adjusting their claim to qualify as unsecured creditors. If they were given a vote, the restructuring plan would likely pass.
He said Catalyst's credibility is on the line. "They got a lot of concessions, they got all this support on restructuring, and the first setback in the process they throw up their hands and rush into a sale." Unions agreed to significant concessions and municipalities have adjusted tax rates to benefit the company.
In the legislature Monday, the Opposition accused the government of being "missing in action."
Finance Minister Kevin Falcon said anything the government can do to help will be looked at, "short, of course, of getting into the business of subsidizing business directly." He said the business tax rate has been cut 40 per cent in the last decade, but pulp and paper is a troubled industry.
Bell, reached in Edmonton, said he has worked on aspects of Catalyst's problem, including the pension change. He said he found Clarke's "combative" approach highly unusual.