In the month since Fraser Papers filed for creditor protection, the papermaker and mill manager has stabilized its businesses with a $20 million loan, satisfied its stockholders and is pursuing an allocation of the $1 billion Canadian Federal Green Transformation Program, company officials said Tuesday.
The letter sent to customers and dated July 28 was signed by Chief Executive Officer J. Peter Gordon, President and Chief Operating Officer Jeffrey Dutton and Vice President of Marketing Matthew Nightingale. It sought to reassure customers that the company was back on solid footing.
“We have stabilized our business and it is running soundly,” the letter said. “All paper machines are operating in normal course. Our suppliers of raw materials, transportation and other critical services have remained supportive. And as always, our focus remains on ensuring we satisfy all of our [customers’] requirements.”
Additional progress includes:
— An Ontario Superior Court decision on July 15 granting a further 90-day period of creditor protection while the company proposes a plan for creditors on or before Oct. 16.
— A New Brunswick government agreement to fund an additional $9 million to complete the company’s Plaster Rock lumber mill modernization. “This capital project will make our integrated fibre model more competitive,” the letter said. “You may recall Plaster Rock is the closest lumber mill to our Edmundston operation but was our least efficient.”
— Unionized employees at the company’s Thurso, Quebec, hardwood pulp mill made “a substantial commitment to their mill and community” by ratifying a new labor contract “that gets us one step closer to finding a permanent solution for this business unit.”
The Toronto-based company on June 18 sought protection from its creditors by initiating a court-supervised restructuring through the Ontario Superior Court of Justice. The company also was filing in U.S. Bankruptcy Court in Delaware for Chapter 15 bankruptcy protection, which provides protection from creditors for companies that operate in more than one country.
The Fraser facility, located just across the St. John River and Canadian border from Madawaska in Edmundston, New Brunswick, was shut down last month and may not be restarted unless the company can find $17 million in annual savings, officials have said.
Operations were expected to continue without disruption at Fraser’s mills in Madawaska and Gorham, N.H., and at the affiliated Katahdin Paper mill in East Millinocket owned by Brookfield Asset Management, Fraser’s parent company.
Fraser lumber yards in Ashland and Masardis also have continued operating.
Fraser is trying to develop a detailed restructuring proposal with the company’s three secured creditors, the letter stated.
The letter also hinted at a shutdown or sale of the company’s sulphite mill in Edmundston. “Our preference is to include the mill [in future plans] but in contrast with our recent experience at Thurso, our New Brunswick pulp mill employees turned down our last proposal, which included terms necessary to competitively reposition the mill,” the letter said.
“Although we are in a challenging business climate and are working through a difficult restructuring, we remain confident in the future of our paper business,” the letter said.