05/31/2012 11:15 EDT | Updated 07/31/2012 05:12 EDT

Idled Cape Breton paper mill gets creditor protection extended until August

HALIFAX - Creditor protection has been extended again for an idled Cape Breton paper mill as it tries to finalize a proposed sale to a British Columbia firm.

Judge John Murphy of the Nova Scotia Supreme Court approved the latest extension today for the NewPage Port Hawkesbury mill in Point Tupper until Aug. 2.

A spokesman for Ernst & Young, the court-appointed monitor overseeing the sale to Pacific West Commercial Corp., says he remains confident that the transaction will be completed.

But Mathew Harris says the monitor expects it will have to request one more extension of creditor protection during a court hearing set for Aug. 1 before it can finalize the sale.

He says the deal still hinges on the Utility and Review Board approving a complex partnership deal with Nova Scotia Power where the utility company would receive tax-free dividend payments for electricity instead of a regular tariff.

That deal also requires approval from the Canada Revenue Agency.

Lawyers for Ernst & Young and NewPage Port Hawkesbury say they aren't certain when those approvals would be made.

The hearing before the Utility and Review Board is scheduled for July 16-18.

Harris said it's expected that creditors will be presented with a proposed settlement in July, at which point they will be asked to agree to it before a decision is made on the electricity rate proposal.

The union that represents workers at the plant have approved a plan that would see 229 of their 550 unionized employees rehired.

The mill was shut down last September.