The B.C. government is taking steps to protect the pensions of retirees and workers at Catalyst Paper, in the event the company goes bankrupt.
The provincial government has announced amendments to its Pension Benefits Standards Regulation to require Catalyst to immediately cover a pension fund shortfall, should the company be forced to sell or shut down any of its mills in B.C.
Catalyst is a major employer in B.C. It owns three pulp and paper mills in B.C. that employ 1,300 mill workers. Another 300 work at the company’s head office in Richmond and distribution centre in Surrey.
In 2012, when Catalyst was forced to seek creditor protection while it restructured, the provincial government at the time relaxed pension funding obligations for the company. At the time, Catalyst had a pension fund shortfall of $74 million.
The Liberal government at the time amended its Pensions Benefit Standards Regulation to give the company up to 16 years to cover the shortfall.
The NDP government is now amending that agreement in a way that will make repaying the pension fund obligations a priority, in the event the company has to shut or sell mills and lay off workers. Should Catalyst be forced to shut down a mill, or seek creditor protection, it will be forced to “immediately” cover the entire shortfall.
In the event Catalyst weathers punishing American duties on Canadian paper products, the original 16-year timeline for covering the shortfall remains in place, which would put full repayment at 2028.
"Our government is putting retirees and workers first," Premier Horgan said in a press release. "We cannot stand by and allow almost 1,000 Catalyst retirees - with an average company pension already less than $20,000 per year - to be last in line should U.S. tariffs push Catalyst into bankruptcy or dissolution."
"In the face of punitive U.S. trade action, our job is to make sure the interests of B.C. workers and retirees are protected. We are working hard to address the impacts of this threat and ensure the long-term viability of Catalyst's B.C. operations, but should threatened tariffs force Catalyst Paper to take desperate actions to protect its own interests, our government's action will protect retirees and workers."
Asked for a comment on the government's move, Catalyst CEO Ned Dwyer suggested in a prepared statement that current strong prices for pulp and paper may be mitigating the impact of the duties, but said a resolution is needed.
"With strong pulp and paper prices we have been able to withstand the onerous U.S. duties we face, but the industry requires real solutions to address the ongoing challenges in B.C. with respect to fibre, electricity costs and other competitiveness issues," he said.
In an attempt to free up cash, Catalyst just last month sold off mills that it owned in the U.S. for US$175 million.
Should Catalyst go bankrupt or have to shut down mills, it would be a major blow to the economies of Crofton, Port Alberni and Powell River, where the mills are major employers and industrial taxpayers.
In March, the U.S. Department of Commerce imposed a preliminary anti-dumping duty of 22% on Catalyst Paper newsprint exports to the U.S. That’s on top of a 6% preliminary countervailing duty that had previously been levied – bringing the total to 28%.
