NewPage pensioners stuck with back payments as company emerges from bankruptcy
- Blog Post by: Adam Belz
- December 5, 2012 - 6:01 PM
Some pretty wild news came out of Nova Scotia a week ago, as the pension administrator for the NewPage Corp. asked 200 pensioners to pay back tens of thousands of dollars in mistaken payments over a period of decades.
The pensioners, as CBC reported, were indignant: "I never caused the error," Harvey Warner told CBC. He’s been asked to pay back $33,000.
"There should have been audits," Warner told CBC. "Don't come back to us for your mistakes."
Meanwhile, NewPage Corp., which owns a mill in Duluth that employs 285 people, is emerging from bankruptcy with a $850 million loan package from JPMorgan Chase & Co., Goldman Sachs, Barclays Plc and Wells Fargo.
I’m not sure whether the pension payments have anything to do with the bankruptcy, but the bottom line is NewPage is in bad shape.
The company has to pay at least 8 percent interest on $500 million to get back on its feet, and its past six years have been a cautionary tale for private equity firms trying to get into the paper industry.
One of the company's vacant mills, in Port Hawkesbury, Nova Scotia, just reopened under new ownership thanks to more than $150 million in Canadian subsidies. Likely not what NewPage had in mind when they closed it amid bankruptcy and sinking demand for supercalendared and coated papers.
The company is the poster-child of struggling American paper companies. Created by the private equity firm Cerberus Capital Management in 2006, NewPage acquired the North American operations of Finnish company Stora Enso for $2.5 billion in 2008, then closed several mills and filed for bankruptcy in 2011.
Three mills in Wisconsin fell victim, including one in Niagara, a town across the Menominee River from the Upper Peninsula of Michigan. The mill made coated paper like the type made at UPM Blandin in Grand Rapids and had been operating there since the 1890s.
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