A Supreme Court justice has ruled that pensioners and employees have a voting stake in the sale of Catalyst Paper. This development means Catalyst can hold a second vote on its restructuring plans.
Justice Robert Sewell ruled that Catalyst can hold a second vote of its creditors on June 25, and that pensioners have a stake in the matter and therefore can vote.
Pensioners were excluded from the first restructuring vote, which was held May 23. The plan failed by three per cent, prompting the company to start the process of selling its mills to the highest bidder.
According to a Catalyst press release, there is support from creditors for an amended restructuring plan. In addition, “certain holders of unsecured notes who previously voted against the plan of arrangement or did not vote on the plan of arrangement have indicated that they will support the amended plan,” the release noted.
Mill pensioners belonging to a defined benefits plan would be heavily impacted in the event of a sale. If the company is restructured then the plan is preserved. If it’s sold, however, then the new owners aren’t obligated to inherit the plan, said Gary McCaig, spokesperson for the Catalyst Salaried Employees and Pensioners Group.
There is no guarantee with a second vote but the parties have done their best, he added.
“We’re pleased that we’ve been able to come this far. But we still have another hurdle to jump through,” McCaig said.
It wasn’t just the groundswell over the pension issue that won the day, McCaig said. “I attribute this to the fact that so many parties — municipal, employees and the public — supported a second vote,” McCaig said. “It’s a really powerful experience when different parties stand together and make their voices heard.”
Municipalities gave tax breaks. Employees made contract concessions. And pensioners gave as well. They surrendered their extended medical benefits under the new plan and allowed to company to repay the pension deficit over 15 years instead of seven years.
“From the creditors’ point of view this gives them the assurance that this is a company with a future,” McCaig said.
According to McCaig, Powell River Mayor Dave Formosa addressed the court and gave an unvarnished explanation of the impact the issue was having, not just in his community but also in others with Catalyst mills.
In a related development, Formosa told CKNW that the provincial government is on the verge of throwing a significant chit into the mix. "The minister of finance has recommended to cabinet to do an order-in-council to allow the pensioners the ability to not have their funds go into annuity, if they don't want. They can pull them out and invest them themselves."
The municipality has done what it can, Port Alberni Mayor John Douglas said. Government is at least looking at other things like reducing the company's Hydro payments, which are once a week right now, and tweaking the HST for them. "Their hands may be tied with that one though because of the referendum," Douglas said.
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