The government of Manitoba has approved a regulation at the request of both Tolko Industries and a potential purchaser of the kraft paper mill in The Pas, Premier Brian Palliser said on Friday.
Tolko Industries, the largest employer in The Pas, announced in August that it would be closing the mill in early December, putting 332 people out of work.
Earlier this month, sources told CBC that New York-based American Industrial Acquisition Corporation was looking at buying the plant. Pallister confirmed the potential purchaser on Friday.
The regulation announced Friday will allow the company to defer contributions to the pension reserve fund for three years. The change should help facilitate the sale of the mill, said Pallister.
When Tolko sells the mill, it also sells the pension fund obligations to the new purchaser. Under the regulation change, the company buying the mill would have to pay back the three years of deferred contributions over the following five years, said Pallister.
While both employees and employer contribute to a pension, due to persistent low interest rates and longer life spans, Tolko, along with many other companies, has been required by law to contribute additional money into the pension fund to ensure it remains solvent.
The Manitoba government is, in essence, giving the purchaser a break for three years from contributing those additional amounts to the pension fund.
Manitoba has given exemptions to a number of pension funds in the past, Pallister said.
Union pleased with progress
Unifor, which represents the majority of Tolko workers in The Pas, is supportive of the deal in theory, said national representative Paul McKie.
“We’re going to withhold final judgement on it until we actually see something in writing,” McKie added.
The union hasn’t made any formal recommendations to its members to accept or reject the idea.
In order for the sale to proceed, the Pension Commission must give current and former members the chance to object to the pension deferment. If 30 per cent or more object to it, the deal falls through, said McKie.
“This is the decision that the workers will have to come to, is weighing those potential risks versus the fact that they could be losing their job,” he said.
Hope for a deal soon
“I want to emphasize that this is a step in the right direction but this is not a fait accomplit. This is not a done deal,” Pallister said.
When speaking of how close the deal is to being signed and sealed, all Pallister would say is “We’ve made progress.… This is hopeful news for the people of The Pas and for the people of Manitoba.”
Pallister said making sure the facility in The Pas remains operational is vital for Manitoba. AIAC has a record of turning struggling companies around, he added.
“Hopefully we have good news to announce in the future,” he said.