Powell River residents and current and pensioned mill employees are waiting to hear the fate of the town's largest employer as Catalyst Paper Corp. seeks a $395 million restructuring plan. Catalyst has been under Companies' Creditors Arrangement Act (CCAA) creditor protection since late January.
Catalyst, whose restructuring plan faced a creditor vote in late April, has already shut down its pulp mill in Campbell River and is seeking court approval to sell its remaining B.C. mills in Powell River and Crofton to the highest bidder, if the restructuring plan fails.
Retired salaried employees of Catalyst stand to lose a substantial portion of their pensions if the company's plan fails.
The company and its noteholders have put forward a sales and investor solicitation process, which includes a "stalking horse bid," rumoured to be from a bond holder. This means some noteholders are prepared to become the new owners - and sellers - of the company.
"All of us hope very strongly that Catalyst management is able to sail through this creditor protection and continue their operations," said Jim Donnelly, who was the investment recovery manager at the Powell River division before he retired in 2007. "If they do, then this is not a problem to any of us."
But if the company doesn't sail through, Donnelly added, "Our pensions are at risk."
There are between 1,000 and 1,100 salaried Catalyst pensioners affected by this, including about 200 living in Powell River.
"We're all hoping that [the] company can make it through this," he said. "But, if it doesn't, the fact remains there are about 1,000 people who stand to lose 40 to 50 per cent of their pension income."
The Superintendent of Pensions has allowed Catalyst relief from making regular contributions to the salaried pension plan for several years, Donnelly explained, because the company has pleaded it was in a difficult financial position. "What that's done is run down the value of the pension plan, to the point where it's $73.5 million underfunded," he said.
Donnelly pointed out that the City of Powell River's mayor and council and the previous mayor and council should be recognized for tax relief to Catalyst and trying to make the business climate better. Catalyst now has about 300 employees, down about 50 per cent from a decade ago.
Concerns about Catalyst's future have affected the housing market, confirmed Warren Behan, a veteran Powell River realtor. "Prices have been falling now for four years," he said. As an example, he pointed to a current Coast Realty listing of an oceanview home in the Westview area priced at $225,000. "You can buy waterfront homes here for less than $500,000," he said. "There are terrific bargains."
from Western Investor May 2012