26 June 2010

Potential GFW mill buyer in German bankruptcy protection for second time in six years

The same week German papermaker Lott sent deputy premier and natural resources minister Kathy Dunderdale a detailed letter proposing to take over the former AbitibiBowater mill in Grand Falls-Windsor,  the company went into bankruptcy protection in Germany.

According to the Insolvenz Rategeber:

Über das Vermögen der  Lott Feinpappen GmbH & Co. KG in Achern wurde Insolvenzantrag gestellt. Der Antrag erfolgte durch eine Gläubigerin des Unternehmens. Betroffen sind 70 Mitarbeiter, deren Löhne für die kommenden drei Monate über das Insolvenzgeld abgesichert sind.

The company – which employs 70 people – previously sought bankruptcy protection in 2004.

The premier’s hand-picked deputy told the House of Assembly on Thursday that she had received a business plan from the company the week previously:

Mr. Speaker, late last week we received a business plan from this company. It is currently undergoing assessment by us, the Department of Finance and the Department of Business. We do not have anything further to report at this time, Mr. Speaker, until that analysis is completed.

Outside the House, she told reporters that she was waiting to receive the business plan. What the company had sent was a detailed letter.

According to euwid-papier.de, Lott sought bankruptcy protection on June.

Dunderdale told reporters on Thursday that the provincial government would study the proposal very carefully.  Dunderdale raised hopes in central Newfoundland in late May by announcing in the legislature that representatives of a then-unnamed company had toured the mill and were interested in re-opening it. Apparently, even though she assured people of the province that her officials would review any proposal carefully, no one had, up to that time, done a preliminary review of the company and its financial history.

This is not the first time the Premier’s carefully chosen right hand has run into problems with business proposals.  As Bond Papers noted in 2005:

Then yesterday, we find out that no one [in Dunderdale’s department]bothered to check out American call-centre company Teletech using what Jack Harris has hilariously referred to as due diligence for dummies: the Internet search engine google.

Dunderdale is well known for blunders.  Some have been laughable.  Some are just plain ridiculous. Some are far more serious.  The deputy premier misled the legislature in 2006 over public tender act violations by a former Tory candidate filling a pork-barrel appointment.

In 2009, the deputy premier told the legislature a memorandum of understanding with Rhode Island for Lower Churchill had fallen through because the state lacked the necessary legislative jurisdiction to handle some aspects of the deal.  Turns out that NALCOR just couldn’t get the power to the state at a competitive price.

Dunderdale has also been known to score the odd own-goal of a far more  significant nature.  In September 2009, she revealed that she and Danny Williams had tried unsuccessfully for five years to interest Hydro-Quebec in an ownership stake in the Lower Churchill.  The deal would have been without redress for the disastrous 19569 Churchill falls contracts.  Before 2003 Williams insisted any deal he signed on the Lower Churchill would have to include redress. 

The secret talks to sell a stake in the Lower Churchill remains the biggest story of the Williams administration which has still not be reported by any mainstream media.