Catalyst Paper Corporation's Hedge Fund Owners Drive Powell River Pulp Mill Into Bankruptcy

The American hedge fund, Third Avenue Management LLC, a N.Y. city hedge fund that is the principle bond holder of Catalyst Paper Corporation and Trimark Global High Yield Bond Fund, the next largest bond holder, have loaded the Powell River mill with debt during the past years when pulp and paper prices were high. Instead of re-investing in the mill's infrastructure by buying new equipment that would have increased productivity the hedge funds paid bonuses to the managers and shareholders. It's the story of hedge funds and absentee owners everywhere.

Now that pulp and paper prices hve returned to more normal historic levels the management of Catalyst can't pay the interest on the debts they've accruded, whadda surprise. So they've now taken the next usual corporate step of attempting to reduce the cost of inputs. These reductions involve labour, raw resources, and by influencing politicians in power to eliminate regulations and taxes. Property taxes are latest boogeymen to be targeted by the corporation.

Catalyst is also demanding immediate concessions from each of its local unions, cuts that would help pay for things like the almost $5 million exit package of chief executive officer Russell Horner who resigned last Monday [Jan. 16th].

Over the decades when the facilities had belonged to BC Forest Products, MacMillan Bloedel, Crown Forest Industries, Fletcher Challenge and Norske Skog the14,000 residents of Powell River benefitted from the mill through the wise usage of the tax revenues generated. In many ways the residents saw these benefits as a tradeoff for the pollution of air and water quality they lived with. Over those decades the union, to its discredit, continued to negotiate only for higher wages instead of taking an equity position along with improvements in working a safety conditions that were so rightfully won.

Now Catalyst is successfully blackmailing the city of Powell River into lower taxes and other concessions by threatening the mill's closure and the local economic depression such a closure could cause. Many locals though, including the writer of these lines, knows that when Pope and Talbot financially failed and closed their Harmac Pulp Mill in Nanaimo, the workers and two other private interests took over the mill and made it profitable and have heard nothing about Harmac crying the blues about the taxes it pays.

We here in Powell River have nothing to fear from Catalyst and its hedge fund owners. Let them get the hell out and don't let the door hit 'em in the behind while they're leaving. The sooner Catalyst goes bankrupt the sooner the mill will be locally owned and run for the benefit of the workers and the community they live in. Power to the people, workers of Powell River's mill must unite not in fear but in victory, they have nothing to lose but their chains.