Hopes high to keep idled ON mill

June 2, 2016

By: Chronicle Journal

Hornepayne Mayor Morley Forster said he hopes his town’s idled lumber mill won’t go the way of the wrecking ball like some other recession-ravaged Northern Ontario forestry mills have done.
“My concern at the moment is that some raider will come in and scrap it,” Forster said Tuesday.

Haavaldsrud Timber, which was idled in December, has been under the control of a receiver — PricewaterhouseCoopers (PWC) — since April 11.

The deadline for firm bids from potential buyers is June 30.

According to documents posted on PWC’s website, Haavaldsrud had nearly $22 million in assets and owed about $40 million to creditors at the time it was placed in receivership.

Of the total debt, nearly $7 million is owed to the provincial government, which is among the secured and unsecured creditors.

Of the $7 million, $1.3 million is for unpaid stumpage.

The mill gets it wood from the Crown Nagagami and Magpie forests.

In 2013, the province provided the company with $30 million in loans and loan guarantees so that the co-gen could get up and running. The co-gen sells electricity to the provincial grid and also provides the mill with a source of steam heat for drying lumber.

Natural Resources and Forestry Minister Bill Mauro said Wednesday that the “best option” is to have the lumber mill and a related 10-megawatt co-gen plant sold together.

Mauro said he couldn’t predict what a buyer might do with the property, but when asked if he would like to see the operation running again, he said of course.

After the June 30 deadline, PWC is expected to present options to the secured creditors.

NDP MPP Mike Mantha, whose riding includes Hornepayne, couldn’t provide names but said there is “definitely interest in the mill from industry.”

Mantha noted that the mill has been fitted with recent equipment upgrades, and the co-gen is nearly brand new.

“It’s a modern operation right in the middle of a wood basket,” Mantha said.

About 130 people were laid off a few weeks before Christmas when Haavaldsrud said it couldn’t reach an power-supply agreement with the province regarding the co-gen plant.

Just after the mill was idled, Haavaldsrud vice-present Frank Grossi said the disagreement with the province “has been going on for a year. We just got to the point where we couldn’t continue.”

Though the lion’s share of the company’s debt is owed to the province and large companies, small businesses have also been impacted by the mill’s closure.

Hornepayne Service Centre is owed about $140,000, according to the PWC documents.

“It’s a lot of money for us,” said owner Carole Gilbert. “We’re hoping to get some of it.”

Forster said some mill employees who were laid off in December have been forced to find jobs at other Northern mills.

“A lot of people are just in a holding pattern,” Forster said.

Since the province is one of the major secured creditors, Forster said he hopes it will lean toward a bidder that would rather reopen the mill than sell it off for scrap.

“The province has put a lot of money into this mill,” Forster noted.

Mantha agreed, saying it wouldn’t make sense to dismantle a co-gen facility that is only a few years old.

Marathon’s former pulp mill is among the Northern forestry plants that closed during the recession and are in the process of being scrapped.

By: Chronicle Journal

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