Bulk of province’s $110-million loan to Corner Brook Pulp and Paper did not go to capital projects: MP
Gerry Byrne says the bulk of the $110-million loan the province gave to Corner Brook Pulp and Paper Ltd. didn’t go to reinvest in improvements in capital inside the mill.
“It was used simply to buy out existing debt from the mill’s bank lenders.”
Byrne made the comments Thursday during an address to the Greater Corner Brook Board of Trade at the Greenwood Inn and Suites.
He said approximately $85 million was simply offered to the Bank of Montreal, Scotiabank and others to put the mill’s debt into the hands of the province, and roll that debt into the province’s finance department.
“Making it all our debt,” he said.
And while the move made a positive impact on making the mill’s debt more “patient,” it afforded little in the way of any other elements of a mill revital- ization plan.
In a followup email Byrne referenced an article posted to The Western Star’s website on Feb. 20, 2014 that quotes a government news release saying approximately $85 million of the loan will be released at the beginning of the agreement to allow the company to refinance existing debt, and for working capital.
The article also says the remaining $25 million would be provided as planned capital improvements are completed.
Byrne said there was money going to capital reinvestment in the plan, but $25 million spread over an extended period of time would still only be a fraction of what the mill had traditionally spent itself.
“In the 1990s, Corner Brook Pulp and Paper and Kruger were spending tens of millions a year on capital repairs and improvements.”
Byrne said with the size of the mill, its age and the immediate issues it faces, investing more money in its long-term future — capital improvement rather than debt transfer — is something that would have been appreciated by him and many other people.
Byrne said there may still be challenges ahead and times of uncertainty.
“But we need confidence that our core economic engine is strong and is healthy. All else fails if you do not have that.”
Byrne encouraged the board to get involved — to keep in regular contact with the mill, to ask for updates on capital plans, the amount invested in the mill, progress on pension solvency and updates on supply opportunities for local businesses.