Corporate shell game

Northern Pulp — the mill in Pictou County — has gone into hibernation. And Northern Pulp — the company — is “insolvent.”

It is one of seven related companies petitioning for creditor protection in the British Columbia Supreme Court, while it seeks “a plan of compromise or arrangement.”

The petitioners seeking relief from debt payments, described in court documents as “persons,” are:

1057863 B.C. Ltd., Northern Resources Nova Scotia Corporation, Northern Pulp Nova Scotia Corporation, Northern Timber Nova Scotia Corporation, 3253527 Nova Scotia Limited, 3243722 Nova Scotia Limited, and Northern Pulp NS GP ULC

Two more affiliates, Northern Pulp Nova Scotia LP and Northern Timber Nova Scotia LP are not petitioners, but are “the main operating entities of the petitioners” and are “indirect subsidiaries of 1057863 B.C. Ltd and Northern Resources Nova Scotia Corporation.”

The total debt from which the petitioners are seeking relief — the “financial difficulty” in which they find themselves — is about $311 million.

Of this, Northern Pulp & Co. owes $4.4. million to 245 creditors, mostly small companies, contractors, and individuals here in Nova Scotia.

Employee-related liabilities — pensions and severance payments — amount to $7.1 million.

The petitioners owe the province of Nova Scotia nearly $86 million.

But the bulk of Northern Pulp’s debt — $213.3 million — is owed to one of the petitioners’ owners, Paper Excellence Canada Holdings Corporation.

So what, exactly, is Paper Excellence Canada Holdings Corporation? And who, exactly, owns it?

A corporate casse-tête

It turns out that despite the hundreds of pages of documents filed with the BC court, and the copious amounts of media coverage — including in the Halifax Examiner — about the controversies that have plagued the Northern Pulp mill in recent years, the question of who really owns it and all the Northern Pulp affiliated companies are still not easy to answer.

But let’s see what we do know.

At the intersection of the Granton Abercombie Road and the Granton Abercrombie Branch Road that leads to the pulp mill on Abercrombie Point, which sits directly across the harbour from the town of Pictou, stands a large signboard. It informs us that Northern Pulp Nova Scotia Corporation is “A Paper Excellence Company.”

A corporate chart in an affidavit supplied to the BC Supreme Court shows that Paper Excellence Canada Holdings owns 30% of something called 1057863 B.C. Ltd, incorporated in BC, which is the court documents describe as the “parent company of the remainder of the Petitioners.”

Under 1057863 B.C. Ltd. is Northern Resources Nova Scotia Corporation, with seven affiliates or subsidiaries.

Readers may recall that former Nova Scotia Progressive Conservative premier John Hamm was a director and chair of the board of Northern Resources Nova Scotia Corporation for several years until he quietly resigned early 2020. Hamm was also a director of four of eight Northern Resources affiliates, namely 343722 Nova Scotia Limited, Northern Pulp Nova Scotia Corporation, Northern Pulp NS GP ULC, and Northern Timber Nova Scotia Corporation.

The Northern Resources Nova Scotia Corporation group of companies appears to be the extent of the Nova Scotia component of the Paper Excellence holdings.

In the 629-page affidavit that Bruce Chapman supplied to the BC Supreme Court for the case, he describes himself as a “business person of Stellarton, Nova Scotia,” and “general manager (Northern Pulp) of Paper Excellence Canada Holdings Corporation (PEC)” who holds the position of “General Manager of the Petitioners.”

PEC is incorporated in British Columbia and according to Chapman’s affidavit, it:

… owns a 30% interest in the Petitioners; the remaining 70% ownership interest in the Petitioners is held by Hervey Investment BV (Netherlands) … a company under common control with PEC.

So what and who is Hervey Investments? According to Dun & Bradstreet business directory, it is a “private limited company subsidiary” that was incorporated in 2018, and it:

… is located in Amsterdam, NOORD-HOLLAND, Netherlands, and is part of the Financial Planners & Investments Industry. Hervey Investments B.V. has 3 employees at this location and generates $144,210 in sales (USD). There are 44 companies in the Hervey Investments B.V. corporate family.

The ultimate parent of Hervey Investments B.V. is Capital Assets Holdings (L) Berhad, a business entity located in Malaysia.

But who owns Paper Excellence Canada Holdings Corporation, the other owner of 1057863 B.C. Ltd?

Turns out that is Paper Excellence B.V., which is another Netherlands-based entity.

A fondness for tax havens

The Tax Justice Network corporate tax haven index ranks the “world’s most important tax havens for multinational corporations,” which it defines as jurisdictions that provide “facilities to help multinationals escape taxes elsewhere.”

The Tax Justice Network explains that its index ranks the tax havens:

… according to how aggressively and how extensively each jurisdiction contributes to helping the world’s multinational enterprises escape paying tax, and erodes the tax revenues of other countries around the world. It also indicates how much each place contributes to a global “race to the bottom” on corporate taxes.

The Netherlands comes in near the very top of the Tax Justice Network’s index of 64 corporate tax havens, ranking fourth.

That means Hervey Investment BV, which is 70% owner of 1057863 B.C. Ltd that is parent to Northern Resources Nova Scotia with its group of Northern Pulp subsidiaries and affiliates that are petitioning for creditor protection, is based in one of the world’s most popular tax havens.

So is Paper Excellence B.V., parent to Paper Excellence Canada Holdings Corporation.

Paper Excellence’s global relations

A few years ago, Greenpeace Netherlands commissioned a study to identify Dutch private companies related to Asia Pulp & Paper (APP), part of the corporate empire of the billionaire Widjaja family of Indonesia.

Authors Jan Willem van Gelder and Petra Spaargaren noted that APP is a pulp and paper group headquartered in Singapore (which also ranks high on the Tax Justice Network’s corporate tax haven index, coming in eighth of 64), and that the study was undertaken because APP was “strongly expanding its pulp and paper activities in overseas markets in Asia, Europe, North America and Australia.”

The authors wrote:

For this foreign expansion, the Widjaja family has set up the Dutch holding company Paper Excellence. Through various foreign subsidiaries [it] has acquired several pulp and paper mills in Canada, France and Germany since 2007. Also, Paper Excellence now owns paper marketing companies in several countries in Europe, Japan and Australia. Because of the attractive Dutch tax climate, Paper Excellence is based in the Netherlands.

Another group of Dutch companies, Bentoning Holding and its two subsidiaries, play a complimentary role to the holding activities of Paper Excellence. The Bentoning group provides loans to Paper Excellence’s subsidiaries to finance the acquisition of pulp and paper mills.

Until the end of 2010 about US$ 250 million is [sic] invested in the pulp and paper mills and marketing companies owned by Paper Excellence. These total investments are financed for 21% by the shareholdings which Paper Excellence holds in its subsidiaries and for 79% by the loans of Bentoning Holding and its subsidiaries.

Despite deep dives into Bentoning Holding, van Gelder and Spaargaren were unable to determine its ownership. They wrote that, “the ownership of Paper Excellence is hidden behind a string of foreign holding companies in Malaysia and the British Virgin Islands.” The latter ranks number one on the Tax Justice Network corporate tax haven index.

The researchers wrote:

By separating ownership (through Paper Excellence) and financing (through Bentoning Holding) of the pulp and paper mills and marketing companies, the Widjaja family makes optimal use of the favourable tax climate in the Netherlands to minimize both its total tax payments and transparency with regard to its international expansion …

But that is not the full extent of the Paper Excellence corporate contortions that the researchers documented:

Instead of paying dividends, the subsidiaries of Paper Excellence pay significant amounts of interests on the loans they have obtained from Bentoning Holding and its subsidiaries. In 2010 an estimated US$ 15.8 million passed through Bentoning Holding to its ultimate owners, presumably the Widjaja family. The tax treaties which the Netherlands has concluded with Canada, Malaysia and Indonesia allow for much lower withholding taxes on this interest flow, then when the same money would have flown as dividends from the subsidiaries to their ultimate parent.

Yes, I know: for us ordinary types for whom taxes are just something you fill out a form and pay, this stuff can be headache-inducing.

All in the Widjaja family

Authors van Gelder and Spaargaren also developed a diagram showing the corporate structure of Paper Excellence B.V., which shows unconfirmed links from the Widjaja family all the way to the companies owned by Paper Excellence in Canada, some of which are now petitioning for creditor relief in B.C.

From company records, the authors wrote that they were not able to confirm the links between the Widjaja family in Indonesia, Elite Shine Investments Ltd in the British Virgin Islands, and Capital Asset Holdings (L) Bhd in Malaysia.

However, they said that at the time of their study, published in 2012, Paper Excellence B.V. “directly and indirectly” owned five pulp mills in Canada, namely Meadow Lake Mechanical Pulp and Prince Albert Pulp Inc. in Saskatchewan, MacKenzie Pulp Inc. and Howe Sound Pulp and Paper in British Columbia, and Northern Resources in Nova Scotia. They continued:

It seems most likely that Paper Excellence [B.V.] has acquired some of these mills itself, and has later grouped these assets under its Canadian subsidiary Paper Excellence Canada Holdings. At the end of 2010, Paper Excellence still held a direct interest of 27% in Meadow Lake Mechanical Pulp Inc., with the other part of the shares probably owned by Paper Excellence Canada Holdings.

Information from financial magazines confirm that the Canadian companies which directly own the mills, including Howe Sound Pulp & Paper LP and Northern Pulp Nova Scotia Corporation, are ultimately owned by Paper Excellence B.V. The mills which were purchased in a later stage were acquired by Paper Excellence Canada Holdings directly. Paper Excellence Canada Holdings confirms that all five Canadian mills are now under its control …

Confused yet? It’s about to get even more convoluted.

A 2015 article by Nelson Bennett in the Dawson Creek Mirror states that Paper Excellence (presumably B.V.) owns 10 mills around the world, including three in Europe and seven in Canada — four in British Columbia, two in Saskatchewan, and one in Nova Scotia.

The article also states that the owner of Paper Excellence (again without specifying whether it was the Canadian or the Netherlands version) is 35-year-old Jackson Widjaja, “who doesn’t give interviews.”

However, Bennett does quote the company’s deputy CEO, Pedro Chang, who “stresses” that Paper Excellence is not a subsidiary of either Asia Pulp & Paper or Sinar Mas, and that it is headquartered in Richmond, BC, and owned 100% by Jackson Widjaja.

Jackson Widjaja is the son of Tejuh Widjaja, chair of Sinar Mas that owns APP, and the grandson of the late Eka Tjipta Widjaja, the billionaire founder of APP and the Sinar Mas Group, who died in January 2019.

Earlier media reports about the expansion of the Widjaja family corporate empire into Canada make it clear that even if Paper Excellence Canada is not a subsidiary of APP and Sinar Mas, the degrees of separation are minimal, as the corporations are all in the Widjaja family.

On August 17, 2010, the Globe and Mail reported that Sinar Mas was “rapidly expanding” in Canada purchasing pulp mills through a “Netherlands-based company called Paper Excellence.” The article by Dave Edner stated that Paper Excellence was created in 2007 as “a separate entity from Sinar Mas, though the two are both owned by the family of Sinar Mas founder Eka Tjipta Widjaja, one of Indonesia’s richest men.”

Ebner also reported that the president of Paper Excellence, without distinguishing between Paper Excellence B.V. and Paper Excellence Canada Holdings, was Peter Wardhana, who was based “with Sinar Mas” in the Indonesian capital, Jakarta, and that he previously “worked directly” for Sinar Mas.

A Reuters story in April 2010 reported that “a unit of Indonesia’s Sinar Mas” was buying the MacKenzie pulp mill in British Columbia, via its Netherlands-based Paper Excellence B.V. It quoted Paper Excellence director Peter Wardhana as saying the idea was to market about 80% of the mill’s kraft pulp in Asia.

The 2012 Greenpeace study states that Paper Excellence Canada Holdings was created on March 31, 2010, and its directors were Ed Roste, Hardi Wardhana, and Sugiarto Kardiman.

An email to Paper Excellence asking (among other questions) whether Peter Wardhana and Hardi Wardhana are the same person received no reply. However, the Open Database of the Corporate World indicates that Hardi Wardhana is a director of many Paper Excellence companies, suggesting that Peter Wardhana quoted in media articles is sometimes also called Hardi Wardhana.

When Paper Excellence bought Northern Pulp in 2011, the Chronicle Herald (now a Saltwire paper) reported on March 30 that Ed Roste was vice president of operations for Paper Excellence and that the company had close ties with Sinar Mas in Asia, which it described as “one of the largest conglomerates in Indonesia” that had “many subsidiaries, including Asia Pulp and Paper.” Roste was quoted as saying this would “give the local mill easier access to Asian markets.”

The article, with no byline, noted that Roste had visited Nova Scotia to meet with then-Premier Darrell Dexter and cabinet ministers, and that three months earlier the federal government, then led by Stephen Harper’s Conservatives, had recognized the Northern Pulp mill’s “commitment to environmental improvement by investing $28 million in three clean-tech programs to benefit Northern Pulp mill operations and the surrounding community.”

Just three months after that corporate welfare from the federal government, and on the heels of 2009 and 2010 loans to Northern Pulp companies from the Nova Scotia government worth $90 million, Paper Excellence acquired the Pictou pulp mill.

Sinar Mas in Canada

Despite all these media reports that highlight the close ties between the Widjaja family / Sinar Mas / Asia Pulp and Paper, and Paper Excellence Canada, its deputy CEO Pedro Chang still denied in 2015 that it was a subsidiary of Sinar Mas or APP.

Technically, that may be true, but only because of the many tiers in between.

A useful tool for navigating corporate labyrinths is Statistics Canada’s Inter-corporate Ownership (IOC), which calls itself “a reliable index of who owns and/or controls whom in Canada,” and “the most authoritative and comprehensive source of information available on corporate ownership; a unique directory of ‘who owns what’ in Canada.”

The 2019 Inter-corporate Ownership index for the Sinar Mas Group shows that it contains 47 corporations in Canada, in a complex pyramid of subsidiaries and affiliates nested inside each other, some nine levels deep. It resides in and is controlled from Indonesia.

The Sinar Mas Group is a corporate behemoth, with hundreds of affiliates and subsidiaries around the world in everything from pulp and paper to mining, communications, healthcare, agribusiness, financial services, and energy. It is still largely controlled and run by members of the Widjaja family, whose net worth, according to Forbes, is US$ 9.6 billion (about $13 billion Canadian). In 2018, total annual revenues from the Sinar Mas conglomerate were estimated to be about US$30 billion.

The ICO index shows that Sinar Mas owns 100% of the voting rights of Singapore-based Asia Pulp & Paper. And APP, in turn, owns 100% of the voting rights of Netherlands-based Paper Excellence B.V., which owns 100% of the voting rights in Paper Excellence Canada Holdings.

This means that Paper Excellence Canada Holdings is a subsidiary of Paper Excellence B.V., which is a subsidiary of APP, which is a subsidiary of Sinar Mas, which is controlled by the Widjaja family.

The family — children and grandchildren of the late founder — who are involved in the family business reportedly run Sinar Mas like a “family council,” and the third generation “tries to met with their seniors on the Sinar Mas board at least once a week.”

The ICO shows cascading lists of direct and indirect subsidiaries. All are controlled from Indonesia, with one exception, Canso Chemicals Limited, which is controlled in Canada. The ICO shows that Northern Pulp NS GP ULC, based in Alaska and controlled in Canada, owns 33% of the shares of Canso Chemicals Limited.[1]

Asia Pulp & Paper Co. Ltd, has three direct subsidiaries, two in jurisdictions that the Tax Justice Network has identified as top corporate tax havens:

1. P.T. Purinusa Ekapersada (controlled and resident in Indonesia), of which Asia Pulp & Paper (Canada) Ltd is a subsidiary
2. Elite Shine Investments Ltd. (controlled in Indonesia, but resident in the British Virgin Islands, and the company that the Greenpeace report was unable to link with the Widjaja family)
3. Paper Excellence B.V. (controlled in Indonesia, resident in the Netherlands)

Paper Excellence B.V. has two direct subsidiaries in Canada: Catalyst Paper Corporation and Paper Excellence Canada Holdings Corporation, both in B.C.

Paper Excellence Canada Holdings Corporation, in turn, has nine subsidiaries:

1. Howe Sound Pulp & Paper Corporation
2. MacKenzie Pulp Mil Corporation
3. Prince Albert Pulp Inc.
4. Chetwynd Pulp Land Company Ltd.
5. Skoomkumchuck Pulp Inc.
6. Chetwynd Mechanical Pulp Inc.
7. 1057863 B.C. Inc.
8. 1028032 B.C. Ltd.
9. MacKenzie Fibre Management Corporation

Northern Pulp’s family tree

And this brings us, at long last, back to the Northern Pulp family of companies and their quest for creditor protection.

According to the petition filed to the B.C. Supreme Court in June 2020, 1057863 B.C. Ltd. “controls each of the other petitioners, who are a group of affiliated corporate entities, on a direct or indirect basis and manages the business operation of each of the other Petitioners.” It is incorporated in B.C. but controlled, like the others, from Indonesia.

The Inter-corporate Ownership page for Sinar Mas shows that 1057863 B.C. Ltd. has one direct subsidiary: Northern Resources Nova Scotia Corporation.

You may be surprised (or not) to learn that Northern Resources Nova Scotia Corporation also has a complex and convoluted family tree.

It has two direct subsidiaries: 3253527 Nova Scotia Limited and 3243722 Nova Scotia Limited.

According to the IOC, 3253527 Nova Scotia Limited has one direct subsidiary: Northern Pulp NS GP ULC.

Northern Pulp NS GP ULC, in turn, has two direct subsidiaries: Northern Pulp NS LP, which resides not in Nova Scotia like the others, but in Alaska, and also Northern Timber Nova Scotia LP.

Northern Pulp NS LP, in turn, has one direct subsidiary: Northern Pulp Nova Scotia Corporation, which owns — as mentioned above — 33% of Canso Chemicals.

And Northern Timber Nova Scotia Corporation has one direct subsidiary: Northern Timber Nova Scotia LP (Nova Scotia).

All of which is to say that no matter how much distance Paper Excellence Canada Holdings spokespeople try to put between themselves and the corporate empire of the Widjaja family in Indonesia, these Paper Excellence Canada companies (both direct and indirect subsidiaries) are all effectively owned and controlled by Sinar Mas / APP, and the Widjaja family that runs them.

And this leads to yet another question. Or rather, several of them.

Why the apparent reticence to acknowledge the close ties between Paper Excellence Canada and its many mills and companies, including the Northern Pulp group of entities, to the Widjaja empire?

What explains deputy CEO Pedro Chang’s apparent determination to make it sound as if Paper Excellence Canada is a truly Canadian company because it is based in Richmond, BC? And why the determination to keep it “legally independent” from other parts of the Widjaja’s family’s Sinar Mas Group, as it was described in a briefing note to BC Premier John Horgan before he met with Jackson Widjaja in 2018?

Why the incredible levels of complexity and opacity of the whole enterprise?

Something to hide?

There are many possible explanations for the secrecy that surrounds the private corporate empire of the Widjaja family. And it doesn’t take much research to show that the secrecy and complexity are certainly nothing new in their modus operandi.

Early media coverage of the Sinar Mas / APP move into Canada and acquisition of Canadian pulp mills, such as this Reuters story from 2010, noted that “green groups” and “some in the forest industry have expressed fear that Sinar Mas will mix pulp from Canada with fiber produced by destructive logging practices in Asia in a bid to label the product as more environmentally friendly.”

There is certainly much about APP’s environmental record, particularly when it comes to deforestation in Southeast Asia, that doesn’t do their reputation any good.

In 2011, Greenpeace found evidence of fibre from old-growth Indonesian forests in packaging used by Mattell and launched a campaign to shame the global toy-maker. That led the producer of Barbie dolls to announce that it would no longer buy unsustainably sourced fibre from APP.

The next year, APP again earned itself unflattering headlines after reports emerged about its illegal logging activities in Indonesia that involved felling endangered tree species in forests that were habitat to the highly endangered Sumatran tiger. This led three multinational companies to temporarily boycott APP products.

In 2004, the Cambodian government had taken legal action against an APP subsidiary for illegal logging in a national park. According to a 2005 article by Keith Andrew Bettinger in Asia Times online:

APP’s business model is a tactically aggressive one: it turns huge profits by quickly stripping forests bare, exploiting age-old forests and indigenous peoples, and leaving town before the environmental consequences are felt. By the time the communities and governments lodge complaints and lawsuits, APP has divested itself of local interests and assets.

In 2013, APP responded to the criticism of its deforesting ways in Southeast Asia, by committing to stop clearing forests, protect remaining ones, improve management of peat land, and work with communities. It signed an agreement with Greenpeace to help it achieve these goals.

The agreement lasted just five years. In 2018, Greenpeace broke with APP after satellite imagery and corporate deeds showed that companies linked to APP and its parent, Sinar Mas, had cleared 8,000 hectares while the agreement was in place.

The year before that, Associated Press (AP) reported that despite its denials, APP had “extensive behind-the-scenes ties and significant influence over wood suppliers linked to fires and deforestation that have degraded Indonesia’s stunning natural environment.” The AP article by Stephen Wright continued:

But the AP has found links between Sinarmas, its pulp and paper arm and nearly all the 27 plantation companies that it has told the outside world are independent. The company’s apparent aim: to “greenwash” its image for the global market.

The AP reviewed nearly 1,100 pages of corporate records related to the purportedly independent plantation companies, which show they are owned by 10 individuals. Six are employees of the Sinarmas group and two are former employees, one with links to the Widjaja family, which owns Sinarmas. Several work in the finance department of Sinarmas Forestry.

In 2018, a Mongabay investigation placed “APP squarely in the middle of an emerging debate about the presence of ‘shadow companies’ among the holdings of the conglomerates that dominate Indonesia’s plantation sector.” Reporting for Mongabay, Philip Jacobson wrote:

An investigation by Mongabay has uncovered new evidence suggesting one of the world’s biggest paper producers, Indonesia’s Asia Pulp & Paper, took deliberate measures to disguise its ownership of a controversial company engaged in deforestation. The revelation comes after repeated denials by APP that it owns the company, as its opaque corporate structure has been dragged into the spotlight.

Stiffing creditors

APP’s financial record is as chequered as its environmental one.

According to Bloomberg, in 2001 APP set a record with “Asia’s worst corporate default” when it stopped payments on US$13.9 billion worth of “bonds, loans and trade payables.” The company became “mired in legal challenges as Indonesian courts cancelled debts and creditors lost millions,” said the article.

In Euromoney, Sarah Webb reported that APP had several “state-of-the-art” pulp mills in China and feared these could be seized by banks there, so the company, “ring-fenced its Chinese operations from its Indonesian assets, kept the Chinese banks separate from its other creditors, and eventually spun off APP China in a debt-for-equity swap that gave the Widjaja family a substantial stake.” Webb continued:

What particularly riled creditors and investors at the time of the showdown, as they tried to negotiate debt repayments, was the discovery that APP and other companies in the Sinar Mas Group had carried out several highly-questionable transactions, often with related parties, that resulted in further losses of at least $1 billion.

More recently, in 2017, Jackson Widjaja, owner of Paper Excellence Canada Holdings, tried to buy the Eldorado pulp mill in Brazil from the billionaire Batista brothers in that country for the tidy sum of US$3.5 billion. By contrast, pulp mills such as the one in MacKenzie BC, cost the company just $20 million Canadian. The price Paper Excellence paid for the Northern Pulp mill has not been disclosed.

But Widjaja’s deal with the Brazilian billionaire brothers fell through over a dispute about collateral. According to Reuters, Paper Excellence fought back, launching an arbitration process against J&F Investimentos, the Batistas’ holding company, and then hiring lobbying firms in the US, allegedly to influence Congress on legislation that would affect foreign companies such as J&F.

Widjaja is clearly no shrinking violet when it comes to leaning on billionaire business rivals, perhaps not surprising for the grandson of the Sinar Mas founder, and someone who cut his business teeth at Sinar Mas.

Meanwhile, back in Canada

Next to the scale of the Widjaja family’s wealth and global dealings — the US$13.9 billion default in 2001, and the efforts to purchase a pulp mill in Brazil for US$ 3.5 billion — the operations of its Canadian affiliates and subsidiaries are relatively insignificant, as are the financial stakes for the corporate owners.

Recall that the debt for which the petitioners sought relief in the BC Supreme Court in June is about $311 million. And that more than two-thirds of the petitioners’ debt — $213.3 million — is owed to the petitioners’ partial owner, Paper Excellence Canada.

On July 3, the petitioners went back to the court to ask for an extension on the credit relief until July 31, while they work on negotiating interim financing of $50 million, saying they will continue, among other things, to:

(a) communicate with local union representatives, the Pictou Landing First Nation, Pension Plan beneficiaries, the Superintendent of Pensions, current and former employees and trade creditors regarding the commencement of the within [sic] CCAA proceedings;

(b) communicate and negotiate with the Province of Nova Scotia;

(c) work with their lenders, the Province of Nova Scotia and the Monitor to finalize the terms of interim financing …

As if in sync with the petitioners, Unifor — which had 200 hourly wage employees at the mill and the chip plant before production stopped — has now chimed in, “urging the Nova Scotia government to work with Northern Pulp to secure Debtor-In-Possession (DIP) financing amid the company’s restructuring.

According to Unifor, as one of the largest creditors to Northern Pulp, “the Nova Scotia government is the one holding the purse strings and they will determine if the company can honour its obligations to the workers and maintain the facility during hibernation.”

The Halifax Examiner emailed Unifor to ask why it says the province “is the one holding the purse strings” when it comes to Northern Pulp, and not its largest creditor, Paper Excellence, which is part of the wealthy corporate conglomerate of Sinar Mas. Unifor’s reply:

As we understand it, as the primary creditor, Paper Excellence has approved DIP financing and they will be the ones to secure the financing. Northern Pulp is looking for the second main creditor, the Nova Scotia Government, to approve the third-party financing to permit payment to the workers as quickly as possible, as it was originally scheduled for payment at the end of this month. Per the company’s message to its staff (our members), that payment will not occur without approval of DIP financing.

In response to a question about what the Debtor-In-Possession would entail, and what Unifor would like it to cover, the union said:

Unifor supports Debtor-In-Possession (DIP) financing to allow the company to restructure and, hopefully, restart the mill following the construction of a new effluent treatment facility that meets provincial and federal guidelines. The union’s primary concern is that severance be paid to the workers who lost their jobs and are now dealing with unemployment during a pandemic. This severance is owed to them and is much-needed.

Other liabilities ought to be paid, as the closure of Northern Pulp impacted thousands of families and small businesses throughout the forestry sector in Nova Scotia.

The Halifax Examiner also emailed Communications Nova Scotia to ask about the outstanding loans to Northern Pulp and whether the province was working with Northern Pulp to secure DIP financing, and if so, for how much. The reply from spokesperson Sarah Levy MacLeod said:

Now that the company has filed for creditor protection under the Companies’ Creditors Arrangement Act, the formal legal process will unfold. We won’t be commenting in detail during this time.

Given the long tradition that governments of Nova Scotia have of lavishing the pulp mill and its owners with multi-million-dollar loans and grants and perks since it opened in the 1960s, no one should be surprised if the province — or rather its citizens — don’t find themselves once again coughing up millions of dollars and coming to the aid of the mill yet again.

And as we’ve seen here, Paper Excellence Canada is part of a corporate empire worth many billions of dollars, owned and run by a family worth many billions.

Part 2 will take a closer look at the petition and the petitioners themselves, at the debt and how it was incurred, and what it all says about corporate accountability (and welfare) in Canada — and beyond.

[1] Canso Chemicals Limited is located adjacent to the pulp mill on Abercrombie Point in Pictou County. Until 1992, the plant produced chlorine for the mill. It was decommissioned in the 1990s, but as the Halifax Examiner reported here, the site is still heavily contaminated by mercury that seeped into the bedrock under the plant. Today Canso Chemicals is half owned by the Olin Corporation, and according to Olin’s US security filings, “Northern Pulp is the other 50% owner (Pioneer related), while the Inter-corporate Ownership directory says Northern Pulp Nova Scotia Corporation controls just 33% of the shares.”h

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