Catalyst Paper says an agreement to sell its two American operations will help the company focus on its three B.C. mills in Port Alberni, Crofton and Powell River.
The Richmond-based company announced Friday it has entered an agreement to sell its paper mills in Rumford, Maine and Biron, Wisconsin to China’s Nine Dragons Paper for US$175 million.
“This transaction allows Catalyst to repay a significant portion of our debt and focus on our British Columbia operations,” Catalyst President and CEO Ned Dwyer said.
“We also continue to work with the provincial and federal governments in our defence against the unwarranted imposition of U.S. countervailing and anti-dumping duties.”
In March, Catalyst Paper started paying up to 28 per cent in tariffs and duties on its products heading to the U.S.
An investigation into the alleged dumping began in August 2017 and the U.S. Department of Commerce said it found Canadian exporters underpriced uncoated groundwood paper by between 0 and 22.16 per cent.
Port Alberni’s mayor said the move could have a significant impact on the mill and the community.
“Frankly I’m not surprised but it is a huge threat to Catalyst as a company and it’s also a huge threat to the viability of this mill because when you add 22.1 percent on top of the bottom line, that’s a lot for any company to even remotely consider swallowing,” Mike Ruttan said.
“So the only option that Catalyst has is to add that to the cost of the paper that they sell to the U.S. and hopefully their purchasers will accept that increase.
Unifor, the union representing workers at the Catalyst mills on Vancouver Island and Powell River, launched a social media campaign in April, asking Canadians to pressure the federal government to address the hefty tariffs.
Unifor says if the Americans don’t back off from their anti-dumping duties, Catalysts’ three B.C. mills will be forced to cut hundreds of jobs.
Catalyst says the sale is expected to close by the end of the second quarter upon a vote to pass the deal by shareholders.
A meeting is scheduled for June 11 and Catalyst says three major shareholders that make up 87 per cent of the outstanding shares have agreed to vote in favour of the transaction.