CANADA (From news reports) -- Northern Pulp's laid off employees may get paid severance after all.
A proposal by parent company Paper Excellence to loan the beleaguered owner of the Pictou County pulp mill would also see salary continuation payments resume to non-unionized employees and benefits continue for retirees.
Paper Excellence is offering a $6.2 million loan to its subsidiary, which is designated to cover its obligations to laid off unionized, non-unionized and retired employees.
Critically, it is not demanding the loan be prioritized above Northern Pulp's debts to the provincial government in the ongoing creditor protection proceedings.
"The province wanted Northern Pulp to do the right thing and pay its employees and retirees what they are owed," reads a written statement issued Wednesday by the Department of Lands and Forestry.
"We are pleased to see they have found a way to do that. We have reviewed the proposal and will support it, as it does not compromise the province's security position or place additional risk on taxpayers."
With provincial government representation at its board meetings, Northern Pulp kicked $75 million up to its parent company as the clock ticked down on the Jan. 31 Boat Harbour Act deadline that forced the closure of the controversial effluent treatment plant and ultimately the mill itself.
After the mill filed for creditor protection this summer, Paper Excellence offered to lend Northern Pulp $50 million to maintain the mill in an idled state, continue legal action against the province, work toward a plan for a new effluent treatment plant and pay obligations to laid off employees and retirees.
But in order to grant the loan, Paper Excellence demanded that it be first to get paid back in the event Northern Pulp goes bankrupt.
The province is Northern Pulp's primary creditor, with $85 million in secured loans.
Beyond significant liabilities, with no operating effluent treatment plant, the company's only major asset is 170,000 hectares of woodland.
The province opposed allowing the loan to go ahead, which would have forced Northern Pulp into bankruptcy. Justice Shelley Fitzpatrick sided with Paper Excellence, allowing $15 million of the loan to go through immediately to keep Northern Pulp functioning as a company until the end of this year.
However, she sided with the province in saying that the company couldn't use any of the money to pay its obligations to laid off and retired employees.
For the 141 former employees who had outstanding severance owed by the mill, that meant upwards of $15,000 each.
"These are people's livelihoods and lives we're talking about," said Graham Kissack, spokesman for Paper Excellence, of the new loan on offer.
"It was the right thing to do."
Paper Excellence will still have to seek permission from Justice Fitzpatrick to give the loan.