Thursday, April 23, 2009

Quebec offers $120M loan to AbitibiBowater

The Quebec government is offering AbitibiBowater loan guarantees worth up to $120.6 million as a temporary measure to help the company with its effort to restructure while under bankruptcy protection.

The loan was announced Friday morning by Natural Resources Minister Claude Béchard and Economic Development Minister Raymond Bachand.

"What is important today, and for the next few months, is that the company continues to operate because, if the company continues to operate, the pensioners get their cheque and the employees get their salary cheque," Bachand said.

He said the government authorized the loan during a special cabinet meeting Thursday, the same day the giant Montreal-based forestry company filed for bankruptcy protection in the United States. It was expected to file for protection in Canada on Friday.

Late Friday, the U.S. Coalition for Fair Lumber Imports said the loan violated the Softwood Lumber Trade Agreement, which "specifically prohibits Canadian government authorities, including provincial governments, from providing 'benefits' to companies that produce softwood lumber."

"Quebec admitted in its announcement that it is providing the subsidy to keep AbitibiBowater's mills operating," said coalition chair Steve Swanson. "As scores of U.S. sawmills close and workers lose their jobs, we will not stand for this type of artificial intervention in the market."

More help possible, minister says

About half of AbitibiBowater's 14,000 employees work in Quebec.

It also pays pensions to about 9,000 retired workers in the province.

The natural resources minister did not exclude the possibility that the province could provide more help in the future.

"We will see it step-by-step.… It's good news for the workers, for the regions, in all the regions, it's huge," Béchard said.

The forestry industry isn't just huge in Quebec, he said; it's an important industry across Canada, and the federal government should be helping.

"We just want to see them trying to work as hard as they did for the automobile sector, [but this time] for the forest industry," Béchard said.

On Thursday, Béchard said the government has no intention of assuming the company's debt, but it is looking at ways to ensure the company's operations continue.

"We will see what will be [the] scenarios, and, as I said, our philosophy is to be sure that the forest will be able to [support] more workers … in Quebec."

The head of the Communications, Energy, and Paperworkers Union of Canada, Dave Coles, said Thursday the first priority is protect the pensions and benefits of company retirees.

"Once we get past that hurdle, it'll be fighting tooth and nail," he said.

"It feels like being the piano player on the Titanic."