Kruger to Reassess Viability of Corner Brook Pulp and Paper Operations

Kruger's Corner Brook Pulp and Paper mill.

May 18, 2012 (Press Release) - Kruger Inc. today announced that it will reassess the viability of Corner Brook Pulp and Paper's operations (Newfoundland (NL), Canada) after one of four groups of pension plan members rejected the proposal to apply funding relief measures to its pension plan deficits.

Today, independent auditor Brian N. Hillier issued his final report showing the total number of objections received before the May 17 deadline from each group, as follows:

Pension Plan for Unionized Employees:

  • Active members (326): ...............177 objections ..........54.3%
  • Retired members (617): ............. 31 objections ............. 5.0%

Pension Plan for Non-Unionized Employees:

  • Active members (78): ..................6 objections .............7.7%
  • Retired members (218): ..............7 objections ..............3.2%

Under NL legislation, in order for the relief measures to be applied, they cannot be opposed by more than one-third of members in each group (active and retirees). Consequently, with 54.3% of active unionized employees opposing the proposal, the relief measures cannot be applied to the unionized employees' pension plan.

The relief measures were a crucial element in the Mill's strategy to improve its competitiveness and secure its future. In recent years, the Kruger Company has gone to extraordinary lengths to support its Corner Brook operation in a very challenging market afflicted by declining demand for newsprint, increasing energy costs and the negative effects of a strong Canadian currency on exports.

In addition to these challenges, the Corner Brook Mill has to contend with other Canadian paper mills that have competitive operating costs and benefit from the additional advantage of funding relief measures for their own pension plan deficits.

The Company is disappointed with this outcome, especially considering the countless efforts that were put in over the last few weeks to communicate with plan members to seek their support.

Founded in 1904, Kruger Inc. is a major producer of publication papers, tissue, lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. The Company is also a leader in paper and paperboard recycling in North America. Kruger operates facilities in Quebec, Ontario, British Columbia, Newfoundland and Labrador and the United States.

Editor's Note: The Corner Brook mill has the capacity to produce 250,000 metric tonnes of newsprint. The mill also produces thermo-mechanical pulp and has two hydro power plants with a combined installed capacity of over 120 megawatts supplying 70% of the mill's energy.

The mill also has a 15-MW biomass cogeneration plant.

SOURCE: Kruger Inc.