Manitoba steps in to assist sale of Tolko mill, deal still not complete

The government of Manitoba has approved a regulation at the request of both TolkoIndustriesand a potential purchaser of the kraft papermill in The Pas, Premier Brian Pallisersaidon Friday.

Tolko Industries, the largest employer in The Pas, announced in August that it would be closing the mill in early December, putting 332 people out of work.

Earlier this month, sources told CBC that New York-based American Industrial Acquisition Corporation waslooking at buying the plant.Pallisterconfirmed the potentialpurchaser on Friday.

• American 'turnaround' company eyesTolkopaper mill in The Pas

The regulation announced Friday will allow the company to defer contributions to the pension reserve fund forthree years. The changeshould help facilitate the sale of the mill, said Pallister.

When Tolko sells the mill, it also sells the pension fund obligations to the new purchaser. Under the regulation change, the company buying the mill would have to pay back the three years of deferred contributions over the following five years, said Pallister.

While both employees and employercontribute to a pension, due to persistent low interest rates and longer life spans, Tolko, along with many other companies, has been required by law to contribute additional money into thepension fundto ensure itremains solvent.

The Manitoba government is, in essence, giving the purchaser a break for three years from contributing those additional amounts to the pension fund.

Manitoba has given exemptions to a numberof pension funds in the past, Pallister said.

Union pleased with progress

Unifor, which represents the majority ofTolkoworkers in The Pas,is supportive of the deal in theory, said national representativePaul McKie.

"We're going to withhold final judgement on it until we actually see something in writing," McKie added.

The union hasn't made any formal recommendations to its members to accept or reject the idea.

• Millions in taxpayer dollars spent over decades couldn't save The Pas mill

In order for the sale to proceed, thePension Commission must give current and former members the chance to object to the pension deferment. If 30 per cent or more object to it,the deal falls through, saidMcKie.

"This is the decision that the workers will have to come to, is weighing those potential risks versus the fact that they could be losing their job," he said.

Hope for a deal soon

"I want to emphasize that this is a step in the right direction but this is notafaitaccomplit. This is not a done deal," Pallister said.

When speaking of how close the deal is to being signed and sealed, all Pallister would say is "We've made progress. This is hopeful news for the people of The Pas and for the people of Manitoba."

Pallister said making sure the facility in The Pas remains operational is vitalfor Manitoba.AIAChas a record of turning struggling companies around, he added.

"Hopefully we have good news to announce in the future," he said.

• TolkoIndustries, largest employer in The Pas, to close