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Plan for paper mill purchase moves forward in Kapuskasing.

Plan for paper mill purchase moves forward in Kapuskasing

The proposed employee buy-out of the Spruce Falls Power and Paper Company in Kapuskasing is progressing.

Kapuskasing Mayor Ted Jewell, the independent chairman of the Purchasing Employees Group (PEG), is confident that the purchase plans are on track.

"We expect to have an agreement concluded in its entirety by June 30," Jewell said, noting that it would be the largest buy-out of its type in Canadian history.

Jewell added that a tentative agreement on price has already been reached with the mill's majority owner, Kimberly-Clark of Dallas. However, he said PEG is not yet prepared to divulge that price.


One of the possible alternatives, if the PEG buy-out bid fails, is known as the "Amos plan."

Under the plan Kimberly-Clark and co-owner The New York Times would drastically restructure the mill to use only one newsprint machine.

The plan is to produce high-quality newsprint at low cost, but it translates into a substantial cut in the number of the mill's employees.

"It would change the face of Kapuskasing altogether," Jewell said. "PEG would never bring that in."

Spruce Falls president Fred Campling called the Amos plan "one possible alternative" for the mill.

Campling said the plan would mean a reduction from the current workforce of 1,550 to less than 300 employees.

The plan would be considered by Kimberly-Clark if the sale to the employees does not go through.

"They still want to sell, in any case," said Campling. However, he added it may also be that the "whole place" would be shut down.

The Amos plan is named after a new mill in Amos, Que.

"It is very efficient, high-quality paper on one paper machine," Campling said.

A sale to the employees appears to be the only chance to keep the whole company going or modified, he noted. "There's no other buyer."

Campling said speculation that Quebec's Kruger Inc., which had reached a tentative agreement last summer to buy the mill, is waiting in the background is inaccurate.

"There's absolutely nothing to those rumors," he commented.

After reaching an agreement Kruger came back with new conditions. It wanted a new water treatment plant built and improvements made to the mill's emission system.

Whatever happens, Campling said the mill will not be able to maintain previous employment levels because of the cost of the modernization which must occur.

One estimate is that a buy-out of the mill would be followed by a $180-million upgrading, including the addition of de-inking equipment for recycling.

Action is also occurring in a number of areas related to the proposed employee buy-out.

Jewell noted that Local 89 of the Canadian Paperworkers Union, the largest local at the mill, had voted in January not to strike.

That decision put the union in line with other unions at the mill, the mayor noted.

Jewell said the union had a standing invitation to join the purchasing employees group.

A delegation from the group attended a Jan. 30 meeting called by the negotiating committee of Local 89 and Local 256 which was chaired by a national representative of the paperworkers union.

The union representatives tabled a document which they had discussed with Labor Minister Bob Mackenzie at a meeting in Toronto on Jan. 25. It stipulated employee conditions for any government involvement in a purchase of the mill.

In early February the International Woodworkers Association of Canada Local 2995 voted for a third time to put off a strike deadline, this time indefinitely. The union, which is represented on PEG, has been in a legal strike position since Dec. 8.


PEG has been advised that the Phoenix Group was dissolved as of Jan. 29.

The Phoenix Group was formed in September by 21 managers and other knowledgeable Spruce Falls employees to explore an employee buy-out of the company, when it became obvious that a sale to another firm would probably not take place and there was no other solution.

PEG views the dissolution of the Phoenix Group as a vote of confidence in its ability to successfully complete a buy-out.


Financial consultants retained by PEG have indicated that the business plan it has developed to date is practical and that it is possible for the employees to purchase the company operations, carry out a modernization program and become a successful entity.

To this end, the first strategic investor has been tentatively lined up, with others scheduled to be contacted.

It is PEG's intent that no one group of strategic investors will have control of the new company, so that the employees with their invested share ownership can control their own destiny.

PHOTO : The Spruce Falls Power and Paper Company in Kapuskasing is the subject of an employee purchase. Ted Jewell, chairman of the employee's group and mayor of Kapuskasing, says the mill's majority owner has agreed on a price.

PHOTO : Kapuskasing Mayor TED JEWELL

PHOTO : Spruce Falls president FRED CAMPLING

COPYRIGHT 1991 Laurentian Business Publishing, Inc.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Spruce Falls Power and Paper Company
Publication:Northern Ontario Business
Date:Mar 1, 1991
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