CCAA extension granted & Northern Pulp continues to advance Environmental Assessment

Northern Pulp announced it will continue to advance its proposed mill transformation project following today’s British Columbia Supreme Court approval of the Company’s requests, including the extension of the stay period under the Companies’ Creditors Arrangement Act (the CCAA) to the end of April 2022.

The Court has also approved the amendment of the interim financing milestone to coincide with the stay extension and use of the interim financing to preserve legal rights.

In their last report, and contrary to concerns raised by the Province of Nova Scotia, the independent Court-appointed Monitor stated that Northern Pulp has been working with due diligence and in good faith, notably regarding the ongoing management of the mill site, preparing the environmental assessment (EA) registration document, and continuing efforts to settle matters with the Province. The Company is satisfied that the Court has granted the relief requested and supported by the Monitor, despite objections raised by the Province.

Northern Pulp is proposing to transform its mill into one of the world’s cleanest, most environmentally focused mills. The EA registration document will be submitted to Nova Scotia Environment and Climate Change (NSECC) by the end of November 2021. NSECC will then issue draft EA terms of reference (ToR) for review, which are anticipated to be finalized by the end of March 2022. The ToR will identify the studies to be completed and the information required for the EA Report. The Company will then have two years to complete the studies and submit its EA Report to NSECC. A decision by the Minister of NSECC is anticipated to be received by August 2024.

“We’re looking forward to submitting the EA registration document and receiving clearly defined terms of reference to guide our work throughout the EA process,” said Graham Kissack, VP, Environment, Health & Safety and Corporate Communications at Paper Excellence. “Throughout the EA process, we are committed to engaging with stakeholders, conducting thorough environmental research, and being transparent with our results. We are convinced that a science-based approach will allow for a successful EA.”

Northern Pulp has been unsuccessful in engaging the Province in settlement discussions to resolve disputes relating to the forced closure of the mill 11-years before the end of the term of the Effluent Treatment Facility (ETF) lease. Northern Pulp has therefore been left with no option but to take steps to preserve and enforce its legal rights. The Province’s opposition to Northern Pulp’s now approved request for use of interim financing during the stay extension to preserve legal rights, considering the Province’s own request for Northern Pulp to file its claim and refusal to enter into settlement discussions, was therefore disappointing.

The closure of the mill has resulted in significant financial losses for Northern Pulp and the longer the mill is closed, the greater the financial impact will be. Northern Pulp has made a demand under the Province’s indemnity for reimbursement of $102 million in indemnified losses incurred up to June 30, 2021, and filed a notice of intended action providing the required advance notice of claims to be made against the Province.

Northern Pulp will take steps during the stay extension to commence and advance legal proceedings against the Province. The resolution of the legal proceedings through settlement before the end of 2024 is a critical component of the Company’s plan to re-start the mill. The Province has stated that any claims filed would have to be evaluated in conjunction with the Boat Harbour Act, together with the evidence supporting each allegation before the Province would consider entering into an alternative dispute resolution process.

“We encourage the Province to work expeditiously to evaluate the claims and cooperate in providing requested evidence to permit the parties to resolve their disputes on a timely basis. The re-start of a transformed mill following EA approvals is in the best interest of all stakeholders. A timely resolution of these disputes, by the time EA approvals are received, is essential,” said Kissack.

On June 19, 2020, Northern Pulp voluntarily filed for protection under CCAA following the Province of Nova Scotia’s decision requiring the Company to cease using the Boat Harbour Effluent Treatment Facility (BHEFT). This left the mill with no ability to treat or transport pulp effluent, resulting in the mill ceasing production.