In its heyday

Pensioners fear huge losses if Catalyst resold

Mill pension plan underfunded $118 million and the government let them get away with it

At the corporate poker table where big-money players from New York are gambling for the future of Catalyst, the “little” guys at the table, the pensioners, feel like they’re being set up to lose.

“This a stacked deck. The sales agreement has already been decided – it just gets worse,” says Terry Stewart of Campbell River.

Stewart, 59, retired from the Elk Falls mill operation in 2010. He’s now on a steering committee for Catalyst Salaried Employees and Pensioners, a group with approximately 200 members. There’s also another group of pensioners who’ve worked for the various owners of Elk Falls, the Retired Salaried Employees Association.

Catalyst, with more than $800 million in debt, is currently under bankruptcy protection and the company’s future is being played out in court. The biggest problem for the pensioners is they’re listed as unsecured creditors.

If the secured creditors – i.e. the big money lenders – don’t agree on a restructuring plan, then Catalyst could very well be sold under an agreement known as a “stalking horse bid.” According to Stewart, that bid was put in place by the secured creditors and he believes they are unlikely to accept the restructuring plan.

What’s worse for the retirees is the pension plan is underfunded by $118 million. If the company is re-sold, there’s no obligation for the buyer to top up the shortfall. The retirees would also lose some medical benefits.

That puts the pensioners in a situation where they must take their remaining funds and buy an annuity. But, Stewart points out, return rates for annuities are currently low.

“If you’re forced to lock in at a loss, that’s nuts,” he says.

Stewart is hopeful other options are first considered. The first being for a board of trustees to manage the pension funds; the second being for the pensioners to wait until interest rates climb before purchasing an annuity; or third, for the monies to be distributed to the members and invested accordingly.

But the rules governing pension plans in B.C. are out-of-date, says Stewart, which only leaves the option of rolling the pension investments – somewhere in the neighbourhood of $200 million – into an annuity.

Representatives of the pension plans are trying to negotiate with the government to update regulations.

“We’re trying to make sure we don’t get screwed…but we’re down on the list,” says Stewart.

What’s worse, he adds, is the provincial Superintendent of Pensions allowed Catalyst to underfund the pension plan for several years.

Stewart wonders whose rights the superintendent was looking out for: the pensioners’ or the company’s?

“We know this was happening,” he says. “The superintendent should act as an advocate on behalf of retirees. It’s painful.”

The bottom line is pensioners stand to lose a lot of money.

“The province never forced Catalyst to pay up and now we find ourselves in a horrific situation,” he says. “It’s not the end of the world, but how would you like to take a 35 per cent pay cut?”

The secured creditors were slated to vote to either restructure or sell Catalyst on Monday.

However, that date was extended and they will now meet May 2.

The B.C. Supreme Court has extended Catalyst Paper’s protection under the Companies’ Creditors Arrangement Act to June 30.

Follow the latest developments at


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