Fraser Papers hurdled its last obstacle to escaping bankruptcy protection Sunday as a Canadian union accepted a revised contract that allows Fraser to shed most of $185 million in pension obligations.
About 69 percent of the voting members of Communications, Energy and Paperworkers Local 29 of Edmundston, New Brunswick, approved the revised deal during voting Sunday, said Bill Peterson, Fraser Papers’ human resources department director.
“It’s been a stressful, difficult weekend for all of us,” Peterson said Sunday, “and now we can continue to work on emerging from creditor protection and get back on our feet as a solid company.”
As approved by a Canadian bankruptcy court judge on Feb. 24, the tentative deal prevents the closure of the 680-worker mill in Madawaska and its pulp mill across the St. John River in Edmundston.
About 65 percent of United Steelworkers Locals 291, 365 and 1247 of Madawaska approved a new three-year contract on Feb. 8 that made the same sacrifice their Canadian counterparts have. Workers also took an immediate 8.5 percent wage cut.
The new 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 the new, post-bankruptcy Fraser company — saved as many as 2,000 jobs in the St. John Valley and New Brunswick.
In Canada, the new deal is deeply resented by union leaders and workers.
They said that Fraser owner Brookfield Asset Management of Toronto made $649 million in profits in 2008, has more than $100 billion in assets, netted $112 million in the third quarter of 2009, and easily could have carried its obligation to pensioners.
Many pensioners are elderly and had worked for the company all of their adult lives, union members said.
Fraser officials have said that Fraser would be forced to fold without the concessions, which are key to the company’s remaining competitive.
A credit group of Brookfield, CIT-Canada and the New Brunswick provincial government would not proceed with a proposed $180 million bailout of Fraser unless the contracts were amended to eliminate the union’s defined benefit pension plan and replaced with another type of pension, Fraser officials said.
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 Brookfield.
Peterson said he was not certain how the credit group’s bailout of Fraser would proceed.