German firm wants Abitibi mill: Newfoundland minister
A German company is hoping to take control of the former AbitibiBowater paper mill in central Newfoundland, Natural Resources Minister Kathy Dunderdale revealed in the house of assembly Thursday afternoon.
Responding to questions in the legislature, Dunderdale said Lott Paper is working with the government in hopes of acquiring the Grand Falls-Windsor mill that closed in February 2009.
Dunderdale told the house she had received a formal business plan, but clarified to reporters afterward that the government had actually received a letter of intent with a fair level of detail. Dunderdale said she expects a business plan by Monday, but cautioned the proposal is far from a done deal.
"This is something that we are very cautious about," Dunderdale said.
"There are not many companies in the world today looking to get into the pulp and paper industry, and that is something that we are going to spend a lot of time analyzing."
No specifics about the negotiations were released, but Dunderdale said Lott's general plan is to buy the mill and use the local wood supply to feed its paper machines. The Ministry of Natural Resources, and the finance and business departments are all involved in the process, she said.
A delegation from the company visited the mill, which mainly produced newsprint, earlier this spring.
According to its website Lott Paper, based in Germany and Austria, specializes in fine and hard cardboard, and has a staff of 100 employees.
A readers' comment at CBC:
Malafat wrote:Posted 2010/06/24 at 5:14 PM ET.........
I am a Newfoundlander living in Germany. I know the Grand Falls former paper mill well. I read recently in a German Newspaper that LOTT applied for insolvency on 16 June 2010. Maybe this is of interest to many there in Grand Falls.
A German company that was scheduled to deliver a comprehensive plan to take over an idled newsprint mill in central Newfoundland is in bankruptcy protection and cannot pursue Canadian ventures, CBC News has learned.
Lott Feinpappen GmbH & Co. was revealed earlier this month as the German company that toured the former AbitibiBowater newsprint mill in Grand Falls-Windsor.
Provincial Natural Resources Minister Kathy Dunderdale said last week that a letter of intent that had already been received was to be followed Monday with a formal business plan.
But Lott Feinpappen, based in Achern, Germany, petitioned for bankruptcy protection on June 15, several weeks after the company made an on-site visit to Grand Falls-Windsor.
As well, a lawyer with the Achern firm of Schultze & Braun told CBC News that Lott does not have the cash to pursue ventures, and cannot do business in Canada because of its legal situation.
The lawyer told CBC News that Lott is currently in "deep trouble." The German state is covering workers' wages at Lott — which produces high-quality paperboard products, and which has been in business for more than a century — until the end of August.
Insolvency procedures are to start in Germany in September.
CBC News attempted to reach Lott managing director Bob Roche, a Canadian-based businessman, but calls were not returned.
Roche was appointed to that position last year when Lott was sold to a private equity firm.
Roche has other business interests in Toronto, including Roche Investment Holdings. Another company, BTP Invest, says it "acquires, revitalizes and grows financially challenged and/or underperforming companies and real estate." Calls to these companies were also not returned.
Dunderdale was not available for an interview on Monday. An official with her office said that the provincial government was still expecting a business plan from Lott, with detailed financial information, and that the government would conduct due diligence on the company.
Montreal-based AbitibiBowater shut down the newsprint mill in Grand Falls-Windsor in 2009, and is itself trying to restructure its affairs through bankruptcy protection. The Newfoundland and Labrador government seized Abitibi's hydro and timber assets before the closure and disclosed earlier this year that it had inadvertently also seized the mill.