The Terrace Standard, Wednesday, October 3, 2001 - Al3 SCI history is repeating itself By JEFF NAGEL IF YOU think you’ve seen SCI shiel- ded from creditors, contractors unpaid country of mg north western But Avenor shareholders balked at to sever its B.C. operations from the deal - which Avenor had indicated it would have sold off anyway, No longer tied to the parent compa- ny and awash in $620 million in debt, Repap B.C. fited the next day for pro- tection from its creditors. Contractors, whose payments had been extended out to three months, were left with huge unpaid bills, and some had begun to place Lens on wood in SCI yards. The TD and Royal banks, which held $480 million of the debt, inheri- ted all shares of the company. The eventual restructuring, under the guidance of Coopers and Lybrand, saw various stakeholders agree to con- cessions to give the renamed Skeena Ceilulose a secand chance, The provincial government pumped Dan Miller Jobs were slashed at the pulp mill and the remaining employees agreed to a wage cut in exchange for 20 per cent stake in the company. But the deal threatened to unravel at various points in 1997, and at one point the Royal insisted on getting out of SCI. The provincial government then, under pressure from North Coast NDP MLA and deputy premier Dan Miller, agreed to buy out the Royal’s shares and become the majority owner. The deal staved off bankruptcy and kept the operations running at least sporadically. But the government bailout, which ballooned to an eventual $350 million, was criticized by B.C. Liberals and southern B.C. pundits as a massive waste of taxpayers’ money, with Texas-based Enron Corp two years ago, but government ministers tejected the offer as loa low: Pulp prices had been rising quickly then, but soen reversed and plummet- ted to levels that forced SCI and other pulp mills around the prevince to close. The election of the B.C. Liberals this spring saw the new government embark on an accelerated push to sell Skeena. By August it became clear that time was of the essence. Enterprise minister Rick Thorpe had with great difficulty secured an extension of SCI’s line of credit from July 31 to Aug, 31. It was unclear through August what would happen if the deadline was breached. ‘But by the end of the month, and banks under pressure before, you BC. have. Aon It’s only been four and a half years ot her since the last time the company ran Montreal- into trouble. based for- On March 4, 1997, Repap B.C. filed est com- for protection under the Companies’ pan y, Creditors Arrangements Act(CCAA), Avenor It ultimately fed to the restructuring Inc. , of the company and contractors and began to suppliers accepting 10 cents on the home in dollar for around $87 million worth of on Repap unpaid bills. in late The events that precipitated the 1996 as a 1997 collapse were rooted in the diffi- potential culties of parent company Repap En- takeover _ terprises. larget. Pulp markets were poor and profits were down. Repap had also funnelled previous profits to a new pulp technology in New Brunswick it was working on, ra- ther than reinvesting in the high-cost Moral argument of loggers the deal management had crafted to buy Repap as too expensive given the debt load they were to take on. As a result, Avenor slashed its offer in early March 1997 and Repap agreed various aid into SCI, including an agreement to, along with the banks, fi- nance a major capital upgrade of the... pulp mill in Prince Rupert in exchange © for a minority position in the company. The NDP government claimed it would move quickly to return the com- _ pany to the private sector. But it proved unable to do so. The province was close to a deal the TD began bouncing SCI cheques. The government went to court and placed the company back in CCAA creditor protection, giving it until this Friday, Oct. 5, to pursue a buyer. rejected by government LOCAL LOGGING contrac- tors and others left hanging with cheques from Skeena Cellulose that won't be cashed are looking for ways to increase pressure. As much as $2.5 million is involved stemming from the refusal of the TD, which is the company’s bank, to honour cheques to contrac- tors written before Aug, 31, The TD began freezing Skeena Cellulose accounts before then even though a line of credit was to have lasted until that date. Contractors did park heavy machinery in front of the TD branch here and blockaded the Skeena Cellulose yard last week. The blockade was taken down in return for meeting with competition minister Rick Thorpe Sept. 28. That meeting didn’t resdlve any of the outstanding is- sues, Said Ken Houlden from the Northwest Loggers As- sociation. “We presented him with our moral argument that since the government was a 72 per cent owner, Skeena Cellulose should pay up,” said Houlden. Rick Thorpe » “He didn’t see. it, Saying. the law. is-the CCAA [the 4 part of the governmentsto- pay‘ contractors ¢ could sel a act which temporarily protects Skeena Cellulose from creditors] and that no one gets paid.” “We expected some kind of moral commitment and S TERRY'S LOCK a 1 proud sponsor of CRIA ia STOPPERS Terrace Crime Stoppers are asking for your help. to “solve an attempted break & enter to a. residenice.on. «September. 26th, 2001. At Heparin 00: 46 ‘a. m. on: Sept ember Crime Stoppers olfers a cash reward of up to $1,000.00 for information leading to an arrest and charges belng ald against an Individual [n this or other unsolved crime, If you have any Information call Crime Steppers at 635-TIPS that's 635-8477. Callers will not be required to reveal their Identity nor testify In court. Crime Stoppers does not aubacribe to call dlaplay, + Commercial, Residential, Automotive Locksmithing © Sales - Sales & Service « Emergency Openings © Bonded & Insured # ASSA & MIWA High Security Locks 46244 GREIG AVENUE, TERRACE, B.C. V8G 1M9 PHONE (250) 635-5548 © Toll Free 1-888-560-5540 | Did you know, more than 30 travelling clinics bring caregivers uti, . from B.C.’s Children’s Hospital to towns across the province, =f - reducing the strain of travel for hundreds of B.C. families? winekisttherna 1-888-663-3033 instead we basically got told it was too bad,” Houlden added. “We’ll have to get together and digest the meet- ing before making our next move.” Houlden did acknowledge that the government has tried but failed to get the TD bank, which owns 28 per cent of the company, join it in applying to the supreme court to get creditors paid. There was some discussion that companies who built logging bridges, for instance, could charge a toll until their bill was paid, said Houlden. ~ “They didn’t say ‘no’ to that yet,” he added. Houlden did say contractors are worried about what could happen this Friday, That’s the day the company comes out from under court-granted creditor protection, meaning that anybody who is owed money could place the company into bankruptcy. Standard along with Northern Photo Ltd. Come into our office Want A Photo? Did you see a photo in the paper that you want a copy of? The Terrace now provides this service. at 3210 Clinton Street and indicate the photo of your choice and size. 'A ghost aeis town's worant history P 5x7" : | located “If that happens the bank gets theirs and the govern- ment gets theirs and the contractors get nothing,” said Houlden. For his part, competition minister Rick Thorpe said A's 6" 5"y7" Other sizes available. Price incladas printing fee from Northern Photo ond purchasing fee fram the Terrace Standard. All photographs are copyrighted te the Terrace Standard. Phone for pricing, he couldn’t even talk about the idea the province has a moral commitment to pay contractors. “Who am I to pick which creditors get paid and which don’t,” said Thorpe who has as his responsibility the disposition of Skeena Cellulose. “I understand the frustration and ] understand they are very upset but it is now before the courts,” he said. ~Thorpe conceded that-sonie’kind -of -maneuver: on the precedent. “What does this get us with ather companies who may go into CCAA?” he asked. (Note: 90% of phetes taken are digital photos of high quality jpeg. Black and white prints also availoble from black and white negatives} northern photo *Your Headquartars For Digital Cameras And Digital Imaging Services” 4-4736 Lakels Avenue Al x6" : ‘TERRACE... 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