UPDATED: Catalyst applies for creditor protection after Crofton's PPWC rejects contract

Catalyst, owner of the Crofton mill, has announced plans to apply for creditor protection. - Andrew Leong/file
Catalyst, owner of the Crofton mill, has announced plans to apply for creditor protection.
— image credit: Andrew Leong/file

Crofton’s PPWC union is being blamed by another local union and Catalyst’s brass for scuttling the timber giant’s massive debt-restructuring plans.

Catalyst Paper’s board of directors has approved filing for creditor protection in B.C.’s Supreme Court, the company announced Tuesday.

That comes three days after Crofton’s 400 members with the Pulp, Paper and Woodworkers of Canada union Local 2 rejected Catalyst’s contract offer by a 58 percent vote.

Local 2 was the sole holdout in recent contract ratification with Catalyst, the firm's boss, Kevin Clarke, says in a press release .

Crofton’s 100-member Communications, Energy and Paperworkers union Local 1132 joined four other CEP locals in Powell River and Port Alberni in ratifying a deal with Catalyst on Friday, he says.

But under Catalyst’s complex restructuring terms, all six of it B.C. unions needed to reach a deal with the pulp-and-paper giant by Jan. 31.

Calalyst also needed two-thirds support of all its 2014 and 2016 noteholders.

The company’s tentative recapitalization plan was toast without all unions agreeing by Tuesday’s Jan. 31 deadline.

“Since these conditions will not be met, the company will not be proceeding with recapitalization under the Canada Business Corporations Act,” Clarke explained.

“Without the new labour agreement, and without two-thirds support from 2014 noteholders, the economics of the previously announced consensual restructuring transaction was undermined.”

Terms of Catalyst’s contract offers were not released.

A PPWC Local 2 spokesperson said the deal had a five-year term in a complex package that one member told the News Leader Pictorial included a 10-per cent wage reduction.

Clarke appreciated support from Catalyst’s five other unions but “it is disappointing we could not gain support from the sixth union local.”

CEP brass shared Clarke’s disappointment.

“Our members worked very hard to make some real sacrifices for their employer, their families, and their communities,” Jim Britton, CEP’s western-region vice-president says in Monday’s news release.

“We are very disappointed all local unions weren’t able to (reach) approval for a new agreement.

“We are not losing hope Catalyst will be able to restructure their debt to avoid CCAA.”

Neither was Clarke. Creditor protection allows Catalyst to still run its daily operations, while creditors’ actions are stayed and Catalyst mulls its future, he explained.

“Despite this setback, it’s important to recognize a majority of employees are making daily contributions that are helping our company build a bridge to the future,” Clarke says.

“A goal we all share is to put our company on a stronger financial footing which helps keep machines running, helps save local jobs an supports mill communities — not just for weeks or months, but for years.”

Local 2 representatives could not be reached for comment prior to deadline.

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