Do or die for N.L. refinery future, memo warns

The future of a proposed refinery in southern Newfoundland rests on the decisions that creditors make Thursday, an internal memo says.

Newfoundland and Labrador Refining Corp. has been under court-ordered bankruptcy protection since last summer as it attempts to find new financing for a $5-billion proposal that has already passed environmental review.

It is attempting to build the first new refinery in North America in two decades.

Creditors are scheduled to decide Thursday on whether to allow NLRC to keep moving on a restructuring plan so that it can weather the global financial crisis and secure financing when markets improve.

NLRC director Brian Dalton wrote a memo to community leaders warning that the company's plans to build a refinery in Placentia Bay are at a critical stage.

Dalton wrote that the proponents andtheir supporters "crossed big river after big river only to find the last one in once-a-100-year flood conditions, and it has essentially just kept rising all year."

Dalton added, "The proposal recognizes that it will take time for the flood to recede so that a fair attempt can be made."

Dalton wrote that that the stakes could not be higher.

"If the vote is unsuccessful, NLRC will be declared bankrupt and this will very likely spell the end of the project journey," Dalton wrote in the memo.

Relations between NLRC and its largest unpaid creditor, though, have been strained.

BAE Newplan Group, a subsidiary of Montreal-based engineering giant SNC-Lavalin, has filed a statement of claim againstNLRC in Newfoundland Supreme Court, alleging that NLRC had been deceptive while describing its financial health.

Until earlier this year, when financing for the project fell through, the NLRC proposal was moving ahead a steady pace. It had gained solid community backing, as well as crucial approval through the environmental assessment process.