Canfor Off the Hook For Fibre Supply To Mackenzie Pulp Mill
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Thursday, September 11, 2008 04:00 AM
Prince George, B.C.- There is a deal between Canfor and the receiver for the Mackenzie Pulp Mill that used to be owned by Pope and Talbot.
According to reports out of Vancouver, the agreement frees Canfor from having to supply the recently sold pulp mill with fibre. Opinion250’s calls to Price Waterhouse Coopers to get further details have not been returned.
Canfor was supposed to be back in court this Friday to argue once again that the contract to supply fibre was not valid. Canfor had shut down it’s sawmill in Mackenzie earlier this year.
The new owner of the Mackenzie Pulp mill is prepared to go ahead with the purchase, although the final price may need to be adjusted. The original offer was for $20 million dollars, but that included the fibre supply. Under the offer, the price could change as per the agreement:
3.6.1.2 Purchase Price - $20 million. There are several scenarios with the 832 APA which would result in a change to the purchase price:
· $7.5 million if 832 elects not to take the Canfor FSAs;
· $6.5 million if the receiver elects not to assign the Canfor FSAs to 832 for reasons that are in the Receiver’s control ( i.e. not as a result of a Court Order or ongoing court proceedings); and
· $0.4 million added to the purchase price, (i.e. added to any of the three purchase prices noted above) if 832 elects to extend the Closing Date by 10 days after the original Closing Date.
Still, Dan White, the Edmonton Alberta man behind the numbered company which made the offer for the mill, is quoted as saying he plans to move forward with the purchase, closing the deal later this month, and bringing the mill back on stream in October.
We have included the actual copy of the agreement for clarification on pricing.
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Comments
Posted by: Get real on September 11 2008 5:15 AMGood for Dan White and the folks in Mackenzie. I wish him all the best - Mackenzie deserves a break!
Posted by: northernjoe on September 11 2008 6:39 AMhmmm, since Canfor obviously has no intent to use the mill or fibre supply in Mackenzie perhaps they should be put on the block so another like Dan White could have a go at it.....
"Our roots are in this community".... indeed corporate greed based in Vancouver... slogan should read :
"Our corporation comes first, screw the people"
"Our roots are in this community".... indeed corporate greed based in Vancouver... slogan should read :
"Our corporation comes first, screw the people"
Posted by: PG GIRL 2 on September 11 2008 7:09 AMCanfor should be forced to give up any rights to that mill, the land and the TFL that is in Mackenzie.
Posted by: mythoughts on September 11 2008 7:16 AMThere's good fibre up there. Canfor will eventually reopen the Mackenzie mill in a few years, once the dollar drops and lumber rises.
Posted by: northernjoe on September 11 2008 8:18 AMA couple of points... no TFL in Mackenzie, just Forest Licenses.... (Minor point)
There well may be good fibre in Mackenzie, but so are there good people... Canfor has screwed the people, they (CANFOR) should be screwed on the fibre...
There well may be good fibre in Mackenzie, but so are there good people... Canfor has screwed the people, they (CANFOR) should be screwed on the fibre...
Posted by: country cuzin on September 11 2008 8:21 AMThe price should read "20 million WITH the FSA - 7.5 million WITHOUT the FSA - and 6.5 MILLION IF THE RECEIVER CHOSES NOT TO ASSIGN THE FSA".
SO it should read "TO" 6.5 not "BY" 6.5 - BIG DIFFERENCE!
Also Mr. Forest Minister should be looking into reclaiming the cutting rights that were assigned to CANFOR as part of the FSA and have them revoked. If CANFOR is not going to run it's mills - it has no need to cut trees.
SO it should read "TO" 6.5 not "BY" 6.5 - BIG DIFFERENCE!
Also Mr. Forest Minister should be looking into reclaiming the cutting rights that were assigned to CANFOR as part of the FSA and have them revoked. If CANFOR is not going to run it's mills - it has no need to cut trees.
Posted by: pgcommuter on September 11 2008 9:29 AMWell the money wins out...Why sre the details of the chip deal not released...why would you sell off the chip deal and risk the mill deal. Who would then be footing the bill for the environmental cleanup if the mill is not sold...looks to be a little short sighted to me....
Posted by: swingline on September 11 2008 9:35 AMI'm surprised they're planning on opening the pulp mill in October. Seems a little overly optimistic to me, it's not like flipping a light switch. But what do I know!
Posted by: Palopu on September 11 2008 10:13 AMI have seen different articles where the term. Price reduced to 6.5 million without the chip supply was used, and have also read articles that state price reduced by 6.5 million without the chip supply. Does anyone know what the exact number is???
Seems to me that 6.5 million for this pulp mill is a pretty low price. Actually if you reduce the price by 6.5 it would be thirteen and a half million which is still a pretty low price.
Seems to me that 6.5 million for this pulp mill is a pretty low price. Actually if you reduce the price by 6.5 it would be thirteen and a half million which is still a pretty low price.
Posted by: country cuzin on September 11 2008 11:12 AMPalopu
Check this site and click "6th report" the numbers are all there.
http://www.pwc.com/ca/eng/about/svcs/brs/poptal-interim-receiver.html
Check this site and click "6th report" the numbers are all there.
http://www.pwc.com/ca/eng/about/svcs/brs/poptal-interim-receiver.html
Posted by: justamom on September 11 2008 11:36 AMWhat a lot of posters need to regconize is the fact that Canfor did provide 'Pope and Talbot' with fibre. Pope and Talbot were dilequent-in paying Canfor for fibre already consumed. If memory serves me correct it was a huge amount of money.
Pope and Talbot owe Canfor a pile of money they cannot provide. Pope and Talbot file for Bankruptsy protection. Meanwhile Canfor still is required to provide fibre while the mill is operational.
Now Canfor in a depressed market-has a lumber mill which cannot sell its chips locally. Anyone in the lumber industry will tell you-the demand for fibre supply has kept a lot of mills going during this difficult time.
With Pope and Talbot closing-
Canfor made the choice to close thier Mackenzie location. In a loosing market the descision was made to keep other mills operational. I do not understand the comments towards Canfor.
While they are owned and operated by share holders, they should have rights as well. If it was you or I in Canfors position, would we do anything different? doubtful !
Pope and Talbot owe Canfor a pile of money they cannot provide. Pope and Talbot file for Bankruptsy protection. Meanwhile Canfor still is required to provide fibre while the mill is operational.
Now Canfor in a depressed market-has a lumber mill which cannot sell its chips locally. Anyone in the lumber industry will tell you-the demand for fibre supply has kept a lot of mills going during this difficult time.
With Pope and Talbot closing-
Canfor made the choice to close thier Mackenzie location. In a loosing market the descision was made to keep other mills operational. I do not understand the comments towards Canfor.
While they are owned and operated by share holders, they should have rights as well. If it was you or I in Canfors position, would we do anything different? doubtful !
Posted by: govsux on September 11 2008 1:55 PMWhy is there a market for logs but not lumber?.....Anyone?
Posted by: mythoughts on September 11 2008 2:38 PMTotally agree justamom, couldn't have said it better. P&T owe Canfor over $5 million for chips they received, used and never paid for. Also, Canfor's Mackenzie sawmill was losing over a million dollars per month, $20+ million a year. It was there biggest financially losing mill. It could not continue.
Posted by: pgcommuter on September 11 2008 11:42 PM Totally disagree with justamom. when the two mills were divided by then owner Fletcher Challenge, separation was on the condition of the chips being supplied to the pulp mill...sawmill was then sold to Slocan (by default Canfor on a takeover of Slocan) the price of the sawmill was at a reduced price because of that chip supply agreement… to get a sweetheart deal for the sawmill and now the ability to end that contract just does not add up. I believe Canfor was also offered the owed money for past chip delivery but they refused and felt they didn’t have a chance in court so dug into the win fall from the plywood plant cash and circumvented the court, waved cash at the receiver to get past the court decision that was not going in their favor
Posted by: Robin Hood on September 12 2008 10:16 AMSo how much money did PWC make off of Canfor "terminating" their chip agreement with the Mackenzie mill?
Posted by: justamom on September 12 2008 11:28 AMpg commuter-thats a pretty big assumption...how about some facts. I do not believe Canfor refused payment for goods.
I believe Canfor refused an offer for settlement of the outstanding amount. A standard practice of recievers. They offer a small percentage of what is owed to creditors. The creditor can either settle or refuse the offer.
I believe Canfor refused an offer for settlement of the outstanding amount. A standard practice of recievers. They offer a small percentage of what is owed to creditors. The creditor can either settle or refuse the offer.
Posted by: pgcommuter on September 12 2008 12:30 PMjustamom-the following is from price waterhouse coopers website from a court order dated Sept 5 2008,
"Relief from Forfeiture
1. Upon payment by the Receiver of all amounts (if any) due to Canadian Forest Products Ltd. (“Canfor”) under the Chip Supply Agreement and the Residual Fibre Supply Agreement both dated January 19, 1996 between Canfor arid Pope & Talbot Ltd. (“P&T’), as amended from time to time (together, the “Canfor Fibre Supply Agreements”) up to the date on which the Canfor Fibre Supply Agreements are assigned to the purchaser of the Mackenzie pulp mill, either to Canfor if there is no dispute as to the quantum outstanding to Canfor, if any, or into trust pending a determination of the amount, if any, outstanding pursuant to the Canfor Fibre Supply Agreements, P&T shall be relieved from any forfeiture under the Canfor Fibre Supply Agreements and Canfor shall be enjoined from terminating the Canfor Fibre Supply Agreements by virtue of any monetary default by P&T thereunder.
2. Canfor is hereby granted leave to appeal this decision pursuant to s. 13 of the Companies Creditor's Arrangement Act
Posted by: justamom on September 12 2008 3:08 PMinteresting. However it does not not state anywhere here that Canfor refused the payment.