Is this the last stand for St. Marys Paper?
After emerging from bankruptcy protection in 2007, the century-old Sault Ste. Marie glossy paper maker is in trouble again.
The company was placed into receivership in an Ontario Superior of Justice, Dec. 29. Ernst & Young was appointed the receiver.
The petitioner was International Forest Products, a Massachusetts-based forest products trader, that signed a multi-year marketing and logistics deal with St. Marys in late 2010 to serve as the exclusive sales agent for the Sault mill's product.
The mill has been closed since April of last year, affecting an estimated 300 employees.
Troubled times and shutdowns have been nothing new in the history of the 117-year-old operation, the city's oldest industry and one of its largest private employers.
As a producer of super calendar paper, used for glossy magazines, catalogues and flyers, the mill has gone through numerous stoppages and restarts over the years.
Management told employees last spring that repairs were being made to its No. 5 paper machine, and further efforts were being made to recapitalize the operation as well as search for a financing partner to construct a much-needed co-generation plant.
Plans for a July restart never materialized amidst local media reports that the order book had dried up. Customers had gone elsewhere during the mill's downtime. There has been no activity on the property since.
The company has traditionally been reliant on orders from big U.S. publishers and retailers, particularly leading into the Christmas shopping months, and had been trying to break into new markets.
In 2007, the bankrupt company was purchased from Belgravia Investments by a group of local investors, led by lawyer Gord Acton.
Since the ownership change, the operation has been propped up by the Ontario government with more than $25 million in aid, starting with a $17-million loan coinciding with the mill's restructuring and restart, and in October 2010 with an $8.8 million loan to again fire up the paper machines.
Sault MPP David Orazietti announced a 10-year power purchase agreement in November 2010 to enable St. Marys to build a $175-million biomass-fuelled, co-generation plant to generate power for the mill with the excess sold into the provincial electricity grid.
