Sault Ste. Marie, Ontario, Canada, 23 March 2012 -- The receiver for the shuttered St. Marys Paper mill in Sault Ste. Marie, Ontario, has been granted court approval to proceed with a sale of assets to 2319839 Ontario Inc. The purchaser is described by the receiver as a consortium of companies, including an auctioneer, a real estate developer, a forest products company, and a metals recycler.

The jobs of all employees of St. Marys Paper are to be terminated before the sale. The purchaser has stated it may try to operate a biomass and co-generation facility, but does not expect to manufacture paper. Any unused assets of the mill are expected to be liquidated.

St. Marys Paper consists of a groundwood pulp mill and three supercalendered paper machines. The mill has operated sporadically since 2009. It shut down in March 2011, because ofa  mechanical problem on a paper machine, and was not restarted because of market weakness. The receiver, Ernst & Young, noted that it had received feedback from several parties during the sales process that it would be not economical to restart the mill given current market conditions for supercalendered paper.

The mill has remained in a cold idle state, and was put into receivership on 30 December 2011. When fully operational, it employed about 300 people.

The mill wood yard is subject to lien in favor of the Ministry of Natural Resources, and is excluded from the purchase agreement.

Ernst & Young, in its latest report to the court, explained that nine parties submitted bids. Three were from demolition firms, three from auctioneers, and three from parties interested in operating certain aspects of the mill or redeveloping it into a biomass operation. The winning bid was none of those.

Ernst & Young also noted that none of the nine bids would provide sufficient proceeds to cover the debt of the mill’s primary secured creditor, International Forest Products. That debt is estimated in the media to be about CAD 7 million.