A union local at Catalyst Paper Corp.’s (TSX: CTL) Crofton pulp mill has rejected a labour agreement, the company announced this morning.
Unanimous ratification of the new labour agreement by January 31 is a condition of a recapitalization transaction Catalyst announced earlier this month.
The company said that Local 2 of the Pulp, Paper and Woodworkers Union of Canada (PPWC) yesterday voted down a new labour agreement. The union represents approximately 380 employees at the company’s Crofton pulp mill.
The company said that on Friday, Communications, Energy and Paperworkers Union of Canada (CEP) local 1132 voted to support the new labour agreement, joining locals 1, 76, 592, and 686, which had earlier ratified the agreement. The CEP locals represent 700 employees at the company’s Crofton, Powell River and Port Alberni paper mills.
Lyn Brown, Catalyst vice-president of marketing and corporate responsibility, did not say whether the union vote has scuttled the recapitalization transaction or whether there will be a further vote.
“That’s a question that you’re going to have to ask the PPWC in terms of what their protocols and timelines and that sort of thing involve,” she said.
“The conditions that were associated with the recapitalization did have a January 31 time horizon on them so we’re standing on the brink of that deadline and this is surely not the outcome we had hoped for. A lot of people at all of our facilities are working really hard to help our company be successful in the face of a tectonic shift in the industry. So this setback is very disappointing.”
Brown said Catalyst’s debt load is the reason for the recapitalization transaction. “The debt we carry now is simply unsustainable and it needs to be addressed and that’s the priority.”
Calls to the PPWC were not returned by press deadline.
In December, Catalyst announced that it was deferring an interest payment, pending finalization of a strategy to deal with its debt. (See “Catalyst restructuring debt, deferring interest payment” – BIV Business Today, December 15.)
Jenny Wagler
@JennyWagler_BIV