The provincial government announced Sunday evening that it has reached a complicated agreement around the Corner Brook Pulp and Paper pension plan, which will essentially shore up the unfunded liability while using the company’s Deer Lake and Watson’s Brook hydroelectric power plant as collateral.
“That would free up more money to invest more money back into the mill to ensure its longevity,” Joyce said.
“This is a win-win. The pensioners want it done; the union men want it done.”
What’s notable, though, is that Corner Brook Pulp and Paper, owned by Kruger Inc., was the largest single donor to the Liberal Party in 2016.
The unpublished spreadsheet of 2016 Liberal political contributions was provided to The Telegram by Elections NL, and it shows four $5,000 donations from Corner Brook Pulp and Paper.
No other organization gave the Liberals more money last year.
Corner Brook Pulp and Paper also gave the Liberals $10,600 back in 2015.
Joyce said that any suggestion that the deal is tied to political donations is totally off base.
“At no time did I even know how much Corner Brook Pulp and Paper donated,” he said.
“This idea that we’re scratching Kruger’s back is absolutely, categorically untrue.”
The Sunday evening deal builds off an earlier 2014 loan from the provincial government to Corner Brook Pulp and Paper for $110 million, which was supposed to be used to refinance existing debt, and do capital improvements, including work to refurbish the Deer Lake and Watson’s Brook power plant.
But the 2014 deal also included a provision that said if Corner Brook Pulp and Paper shut down or defaulted on the loan, the provincial government would buy the Deer Lake power plant outright.
If this happened in 2017, the purchase price for the power plant would be $150 million, if it were to happen in 2018, it would be $175 million, and if it were to happen in 2019, or any time after the Maritime Link power cable to Nova Scotia was completed, the purchase price for the hydroelectric dam was set at $200 million.
So since the loan was only for $110 million, and Corner Brook Pulp and Paper is guaranteed $200 million for the power plant any time after 2019, that means even if the company defaults on the full 2014 loan, it’s still guaranteed a payment of $90 million from the provincial government at some point in the future, in exchange for the power plant.
This week’s deal essentially sets up a legally binding requirement for Corner Brook Pulp and Paper to use $2 million of that $90 million on remediating environmental liabilities. The other $88 million must be put into the pension plan.
Joyce said this whole complicated deal means that the mill’s current unfunded pension liability is wiped out, essentially using the value of the power plant as collateral.
Joyce said this is good news for the roughly 500 pensioners in the Corner Brook area, as well as the current mill employees.
He said this deal has been in the works since January or February of 2016, so the negotiations were happening at the same time that Corner Brook Pulp and Paper was making those four $5,000 political donations to the Liberal Party.
All of this, including the political donations, will undoubtedly spill over into the House of Assembly on Monday, because to enact this deal, the provincial government will have to pass legislation authorizing it.