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Paper Excellence Canada and Nova Scotia reach agreement; Pictou mill will not reopen

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Paper Excellence Canada announced that it has reached an agreement with the Canadian province of Nova Scotia that recognizes that plans to remodel and reopen Northern Pulp Nova Scotia in Pictou will not be implemented, and provides for a review process agreed between the Northern Pulp group and the province of Nova Scotia to determine whether a new, modern mill in Nova Scotia is viable. The agreement also provides for the resolution of outstanding litigation and loans between the two parties and comprehensively addresses the pensions of former mill employees.

The settlement agreement must be approved by the Supreme Court of British Columbia.

Feasibility study for a new, modern plant
The core of the agreement is the establishment of a review process by the Northern Pulp Group (a subsidiary of the Paper Excellence Group) and the Province of Nova Scotia to investigate the feasibility of a new, modern mill in Liverpool, Nova Scotia. Paper Excellence Canada will fund this review process and, in close coordination with the Province of Nova Scotia, will conduct a feasibility study to determine whether it makes economic sense to open a new mill there.

The possible construction of a state-of-the-art Northern Bleached Softwood Kraft (NBSK) pulp mill therefore depends on the determination of profitability within the framework of this study.

If a new mill is viable, the Northern Pulp group will seek third-party project financing to design, build and operate it. Northern Pulp will also pay the province $15 million to fully settle past debts related to the forests and will continue to own the forests.

If a new plant is not viable, the Northern Pulp group's assets in Nova Scotia will be sold in a controlled process. Proceeds from the sale will be used to repay debtor-in-possession financing incurred in Northern Pulp's CCAA process, fund and settle pension plans, and cover remediation costs. Any remaining funds will go to the province to repay debt owed to it.

Pictou site to be retained for potential logistics activities
Paper Excellence's plans to remodel and reopen Northern Pulp Nova Scotia will not proceed. Instead, the focus will shift to preserving the site for possible future forest logistics activities, on the condition that a new mill is built elsewhere in Nova Scotia.

The Pictou site will remain in cold dormancy during the feasibility study. Northern Pulp Nova Scotia will continue to meet its obligations under existing Ministerial Regulations and environmental laws and regulations and will provide ongoing care and maintenance of the site.

Northern Pulp Nova Scotia will remain in the CCAA for as long as necessary to achieve the objectives of the agreement.

Pension funds for former employees should be fully funded
Regardless of the results of the feasibility study, the outstanding pension payments of current and former employees of Northern Pulp Nova Scotia will be fully funded and pension obligations will be fully satisfied.

Withdrawal of lawsuit and debt settlement
To resolve all outstanding legal claims, Paper Excellence will withdraw its claim against the Province and settle the debts in accordance with the terms of the settlement agreement. This resolution paves the way for future cooperation between Paper Excellence and the Province of Nova Scotia.

The application for approval of the settlement agreement will be heard before the Supreme Court of British Columbia on May 31, 2024.

Headquartered in British Columbia, Paper Excellence Canada is a diversified producer of pulp and specialty papers, as well as printing, writing and packaging papers in Canada with a production capacity of over 2.5 million tonnes per year and a workforce of over 2,100 employees.