News Releases

News Release - Manitoba

October 14, 2016

Manitoba Government Takes Measures to Support Continued Operation of Kraft Paper Mill in The Pas and Protect Jobs



Growth, Enterprise and Trade Minister Cliff Cullen today announced passage of a regulation by the new government of Manitoba to support and facilitate the acquisition and continued operation of the kraft paper mill in The Pas by American Industrial Acquisition Corporation (AIAC).  The mill is currently owned by Tolko Industries (Tolko), which had announced in August its intention to close the mill by Dec. 2.

“Our government is committed to sustainable, long-term economic diversification and development in northern Manitoba, which includes both the preservation of existing jobs and the creation of new opportunities,” said Cullen.  “While our government seeks to create favourable conditions that allow for and encourage investment and economic development, Manitoba’s history over the past decade establishes that short-term subsidies and unwise taxpayer-funded bailouts have not been successful.

“A different approach is required, one that balances the importance of supporting businesses that invest and create jobs, while responsibly managing taxpayer money for the benefit of all Manitobans.  Our government is therefore very pleased to have played a part in facilitating this agreement, a development, which if approved by current employees and pension plan members, will preserve existing jobs that would otherwise be lost in The Pas and surrounding communities.”

On Sept. 23, Tolko received a letter of intent from AIAC to acquire the assets and liabilities of the Tolko Manitoba Kraft Paper Unit and Solid Wood Business Unit.  AIAC has a demonstrated pattern of success in the purchase and turnaround of industrial operations in North America, Europe and Asia.

The letter of intent included a number of requests of government and existing employees and an ambitious timeframe for conclusion of an agreement in order to ensure job protection through the seamless transition of the business and minimal operational disruption. This led to a series of negotiations as the government acted responsibly to balance all necessary considerations, Cullen said.

The government has passed a statutory regulation to provide temporary relief through a potential three-year exemption from amortized pension solvency requirements under the Pension Benefits Act Regulations concerning the existing Tolko employee pension plans in Manitoba.  This exemption is subject to the agreement of a significant majority of Tolko’s current employees and pension plan members following proper notice under the existing regulations, the minister noted.  Specifically, it is only operative if less than one-third of the active members as a group and less than one-third of the pensioners and other beneficiaries as a group object to the employer’s election to seek the exemption.

The AIAC acquisition will allow for the preservation of existing jobs, both directly at the mill in The Pas and in affected support sectors including wood cutters.  It will also preserve a significant corporate tax base within the community and is a positive development for the broader social and economic development of northern Manitoba.

“This private-sector driven solution involved some creativity but does not involve government subsidies or the use of taxpayer funds.  It is consistent with our government’s commitment to ensuring that direct support for industry is accompanied by long-term and sustained economic impacts and opportunities for the communities in which those industries operate,” added Cullen.

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