Re-start for St. Marys.

The new local owners of St. Marys Paper have secured $43 million in private financing and were expecting production of super calendar paper to resume by late June.

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After a two-month shutdown at the 100-year-old Sault Ste. Marie mill, which put 380 employees out of work, a local investors group reached an agreement with the court-appointed receiver and an Ontario Superior Court in early June for the bankrupt company.

Sault lawyer Gord Acton, the new company president, says the order book from some long-time customers is gradually filling up and management was expecting to start-up their workhouse No. 5 paper machine by June 20-21.

The rest of the machines will be running as orders permit. "Hopefully sooner, than later," says Acton.

The No. 5 machine generates 150,000 tonnes of paper annually of the mill's total 220,000 tonne production.

Acton, the spokesman for the undisclosed local group, was in Toronto in mid-June borrowing $43 million from a national institutional lender after the sale closed, June 11.

St. Marys shut down the last of three paper machines April 21.

The company entered Companies' Creditors Arrangement Act protection on Oct. 25 blaming high energy costs, a strong Canadian dollar and an inability to make pension fund payments.

The previous owners (Vancouver's Ron Stern and Belgravia Investments) attempt to refinance the company by asking for pension and wage concessions was rejected by the Communications, Energy and Paperworkers Union of Canada (CEP).

The CEP represented 335 members in four bargaining units inside the mill.

Acton met with CEP Ontario Region Vice President Cec Makowski and struck a new deal. He would not disclose the terms except to say its an "appropriate" long-term contract which provides a "stable platform for success."

It will mean a leaner workforce with 40 fewer jobs.

Acton says the bulk of the money is earmarked for construction of a bio-mass co-generation facility, for automation upgrades to the mill's control systems and to embarke upon an energy reduction program with a steam recapturing unit. The remainder will be used for mill operating capital.

The provincial government has pledged a $17 million aid package that includes a $6 million grant offered through the province's Pulp and Paper Energy Rebate Program.

The mill is eligible for further grants through the Ministry of Natural Resources' Forestry Sector Prosperity Fund to cover the portion of costs of the a co-gen plant and upgrades to the mill's production line.

Reducing all costs to make productivity gains is a priority, says Acton.

"In terms of revenue and tonnes per person as a measure of productivity, we're not there ... in order to be competitive with a strengthening dollar."

It means investing in new technologies for better efficiencies and production as well as finding cost savings in the mill and on the woodlands side.

St. Marys fits a narrowly defined market sector as super calendar producer, commonly used as newspaper inserts and magazine publishing.

Most of their market fits within a 10-hour drive of the Sault particularly with large printer and publishing houses in Chicago and the U.S. Midwest. But the company intends to make inroads into Toronto where their Canadian sales average only two per cent of revenue.

Acton says although many of their major customers were forced to make alternative arrangements during two-month shut-down, "we've seen that book of the business come back to us in orders being placed by former clients.

www.stmarys-paper.com

By IAN ROSS 

Northern Ontario Business