Port Alice mill declared bankrupt with $272M in debts

The Neucel Specialty Cellulose pulp mill in Port Alice has been declared bankrupt with $272 million in debts.

Founded in 1916, the mill was the economic bedrock of the northern Vancouver Island village, but has been closed since 2015. It had also shut down under a previous owner in 2004, reopening two years later.

article continues below

Fulida Group Holdings Ltd., a textile producer based in China, took over full ownership of Neucel Specialty Cellulose in February 2011, buying it from a consortium of investors led by Wellspring Capital Management. Fulida had already held a minority stake.

At that time the chairman of Fulida said “I strongly believe that this purchase will ensure a stable, sustainable and rapid development for Neucel, and thus help it to further achieve its unique enterprise value.”

But prices for its sulfite pulp sank as costs climbed, leading Fulida to announce the 2015 shutdown, putting 400 employees out of work. Many lived in Port McNeill and Port Hardy.

The closure was supposed to be temporary but the mill did not reopen, a tough blow for Port Alice. The mill paid the majority of property taxes in the village. The municipality is owed $1.8 million, according to the trustee’s report, and has been forced to cut services. The village’s population fell to 664 in 2016 from 805 in 2011.

Early last year, a man arrived at the mill saying that Fulida did not own it anymore. He said that he had been paying to maintain the property and ordered that the 12 remaining workers be laid off.

The declaration of bankruptcy took place in B.C. Supreme Court last month.

A telephone meeting of creditors is set for May 21 with trustee PricewaterhouseCoopers Inc.

Of the money owed, $238.6 million is secured, trustee documents said.

The largest secured creditor is Fulida (Canada) Holdings Ltd., owed $235 million, followed by the province of B.C. at $13.4 million.

Company assets, consisting of the land and buildings, are deemed to be worth $69,904.

The trustee plans to secure the mill site, sell all possible assets, and remediate and decommission the mill site and its surrounding properties.

Two requests for proposals have been issued — one for fencing and another for security at the site.

cjwilson@timescolonist.com

Read Related Topics

© Copyright Times Colonist



Most Popular