A Canadian paperworkers union will vote Sunday on whether to accept a revised contract that allows Fraser Papers to shed most of $185 million in pension obligations to escape bankruptcy protection and form a new company.
Communications, Energy and Paperworkers Local 29 of Edmundston, New Brunswick, is due to vote from 1 to 6:30 p.m. Sunday on whether to accept the new deal, said Bill Peterson, Fraser Papers’ human resources department director.
The union held informational sessions about the contract on Friday in preparation for the vote, Peterson said.
As approved by a Canadian bankruptcy court judge on Feb. 24, the tentative deal’s acceptance will keep Fraser from having to close its mills in Madawaska and Edmundston.
Fraser also owns lumber mills in Ashland and Masardis, Maine, and Juniper and Plaster Rock, New Brunswick; a pulp mill in Thurso, Quebec; and a paper mill in Gorham, N.H. Fraser manages paper mills in Millinocket and East Millinocket, Maine, for parent company Brookfield Asset Management of Toronto.
CEP national President Dave Coles backed the deal with deep reluctance. Instead of taking an initial offer that would have cut pensions by as much as 44 percent, he said, the union got a smaller cut and continued pension contributions from the new company Fraser plans to form, temporarily called Newco.
About 65 percent of the 460 members of United Steelworkers Locals 291, 365 and 1247 of Madawaska approved a new three-year contract on Feb. 8 that made the same sacrifice and also put into effect an immediate 8.5 percent wage cut.
Fraser officials feared that the judge would have ended the company’s protection, forcing liquidation. Coles agreed. CEP officials had speculated that if an agreement weren’t reached, Brookfield Asset Management still would have proceeded with Newco.
Brookfield made $649 million in profits in 2008, has more than $100 billion in assets and netted $112 million in the third quarter of 2009 alone.
The new union deals — plus the New Brunswick government’s dissolution of credit letters held by the region’s public electric utility, freeing more than $20 million for Newco — helped save as many as 2,000 jobs in the St. John Valley and New Brunswick.
The new company will emerge from the debris of Fraser with a strong balance sheet, modest debt, an already-profitable specialty papers mill in Madawaska and a solid backlog of orders, Fraser executives have said.