It is a blast from the recent past, but NewPage Holdings Inc.’s annual report may hold some interest for Nova Scotians.
NewPage Holdings, the new name of the former owner of the NewPage Port Hawkesbury paper plant at the Strait of Canso, booked an US$18 million gain after the “deconsolidation” of the Nova Scotia plant from its American operations.
In the 2012 annual report of its predecessor company filed over the weekend, NewPage Holdings management said it separated NewPage Port Hawkesbury from its operations in the United States effective Sept. 6, 2011, because it “lost control” of the Nova Scotia plant as part of a settlement agreement under the federal Companies’ Creditors Arrangement Act.
The Ohio-based company reported a 2012 profit of about US$1.3 billion (US$12.58 per share) on sales of US$3.1 billion. NewPage also reported a loss of US$498 million on sales of US$3.5 billion in 2011 and a loss of US$656 million on about US$3.6 billion in sales in 2010.
Most Nova Scotia taxpayers know the sad story of NewPage Port Hawkesbury and would be happy never to see the name NewPage again.
After NewPage sought protection from creditors in September 2011, it threw the Strait of Canso and northern Nova Scotia into an economic crisis. The NDP government stepped in with $36.8 million to keep the plant on “hot idle” to allow a quick restart of the operation once a new buyer was found.
Eventually, Stern Partners Inc. of Vancouver acquired the paper mill after the provincial government agreed to put up $124.5 million over 10 years. Before that, the workforce and pensioners also agreed to accept major concessions, including a major downgrade of pension benefits.
In its annual report, NewPage Holdings, which emerged from creditor protection in the U.S. on Dec. 21, indicated that as a result of the deconsolidation of NewPage Port Hawkesbury, the company adopted the cost method of accounting for its Nova Scotia investment.
“Upon adoption of the cost method, we evaluated our investment in (NewPage Port Hawkesbury) for impairment and determined that our entire investment had experienced an other-than-temporary decline in value and was fully impaired,” management said.
“As a result of the de-recognition of the assets and liabilities, combined with the settlement payment and fair value of the remaining equity interest, the deconsolidation of the … (Port Hawkesbury) subsidiary resulted in an US$18 (million) gain recorded in reorganization items, net.”
NewPage also says the biomass project it planned to build at the Nova Scotia plant, in conjunction with Nova Scotia Power Inc., was part of the settlement under the arrangement with creditors, and some of the rights were given to Nova Scotia Power.
The power utility and the new owner of the paper mill have now adopted the operating agreement Nova Scotia Power had with NewPage, said the U.S. paper company.
In general, NewPage now says demand for its printing and writing paper products could be adversely affected by the economy and growth in the Internet. In fact, it says economic conditions and shifting consumer preferences have had an adverse effect on NewPage since 2008.
“Although advertising and print media usage began to increase during the second half of 2010 and initial months of 2011, demand began to decline later in 2011 and continued into 2012 due to lower advertising (spending) in an uncertain economy, coupled with a shift to electronic media (both content and advertising),” management said in the report.
source: http://thechronicleherald.ca By ROGER TAYLOR | Business Columnist (This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.)