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Catalyst files for creditor protection - Alberni ponders industrial tax impact

Alberni's civic leaders are pondering the possible industrial tax impact after Catalyst filed for creditor protection Tuesday morning.
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Catalyst Paper Corp. has filed for creditor protection in B.C. but according to company officials it will be business as usual

Catalyst Paper Corp has filed for creditor protection in B.C. Supreme Court.

The company, which owns mills in  Port Alberni, Crofton and Powell River, made the announcement in a statement released Tuesday on its website. Earlier this month, Catalyst filed for protection under Chapter 15 of the US bankruptcy code.

The most recent move shields the company from all legal proceedings by its creditors.

Catalyst operations including the mill in Alberni will continue and obligations to employees and suppliers will be met, the release noted.

How it will impact industrial taxes that they owe the City of Port Alberni isn’t known, city manager Ken Watson said. This city is embarking on its five-year-financial plan deliberations in the next two weeks.

“The release says operations will continue and obligations to suppliers will be met; I hope that means continuing to pay their taxes,” Watson said.

Council will discuss this issue next week, he added.

Local Catalyst mill manager Tom Paisley called Mayor John Douglas on Tuesday morning and apprised him of the development. “He said that work would carry on as usual and that everyone would get paid,” Douglas said.

Catalyst paid $4.6 million in industrial taxes last year and is estimated to owe $4.3 million in 2012.

The city has spent the past five years incrementally reducing industrial taxes, which accounts for the difference. That strategy was in response to Catalyst’s assertion that Alberni’s industrial taxes were too rich. The city embarked on the five-year plan to ease in the changes.

These reductions weren’t just for Catalyst, but also for large industry, such as Western Forest Products.

“Are we concerned about this – we’re always concerned about business and do what we can to help,” Douglas said.

The city has been trying to diversify its economy in an attempt not to put all its eggs in one major basket. “We’re preparing for Catalyst by diversifying the economy and having reserve funds in place,” Douglas said. “I’m confident we’re following the right road and I’m optimistic for the future both short and long term.”

The company’s move is a business one and not a political one, city business liaison Coun. Hira Chopra said.

“It doesn’t necessarily mean that they don’t have to pay their taxes,” Chopra said.

The move means that the company is given breathing room to restructure their loan payments without being pressured by the banks.

“It has nothing to do with the city and shouldn’t affect their business with the city,” Chopra said.

Chopra wouldn’t speculate further without hearing about the development in more detail. “We have to wait and see and not panic, we have to find out more,” Chopra said.

Coun. Jack McLeman said that he knew something was up when he saw that Catalyst shares stopped trading Tuesday morning.

The move still leaves McLeman pensive about what’s to come. “It’s not the short term I’m worried about, it’s what they are going to do in the long term.”

In a related development, Crofton's pulp and paper union members rejected a contract offer by Catalyst on Friday, Jan. 27. The plan was endorsed by Catalyst's five other union's including Alberni's but it was all for not because unanimous ratification was required.

reporter@albernivalleynews.com