Newsrelease

April 1, 1997
Edmonton, Alberta

Alberta Sells Its Investment in Millar Western

The Alberta Government has entered into agreements to sell its investment in Millar Western. When the transaction is complete, proceeds will total approximately $27.8 million. Once approved by Cabinet and the Millar Western Board of Directors, this transaction will end Alberta's financial involvement with Millar Western's Whitecourt pulp mill.

It was government's objective to get the best value it could from this investment. TD Securities Inc. prepared an independent valuation of the province's interest in Millar Western. They concluded that $27.8 million was a fair offer (the final return depends on interest rates on the day the sale officially closes, before April 30).

"It was time to end it. And frankly, it's the best we could expect today. As Provincial Treasurer, I'm committed to ending taxpayers involvement in business," said Provincial Treasurer Stockwell Day.

The details:

• In 1987, government provided a $120 million loan from the Heritage Fund to Millar Western to help finance the construction of the Whitecourt pulp mill. Loan principal and interest of 10% per year was to have been paid out of project cash flow. To date, no payments of interest or principal have been received. No accruals for interest income were recorded in the province's books.
• The outstanding loan to Millar Western, including accumulated interest is approximately $272 million. With the sale today, the total cost to the province would stand at $244.2 million.
• This has already been fully provided for in the province's financial statements. Proceeds from today's disposition are $7 million more than the province currently is carrying on the books. The value of the Millar Western loan has already been written down to $21 million. With this sale, Millar Western will have no further impact on the government's bottom line.

"It was our objective to end this transaction," said Day. "We're out of the business of financing Millar Western. With this agreement today, we can close our books on this mill."

Separate from this agreement, the government entered into discussions with Millar Western in 1995 to convert their quota interests to a Forest Management Agreement (FMA). These negotiations are consistent with the government's recent approach with other forest industry companies, including High Level Forest Products and Sundance. The province recognizes significant savings from the industry assuming the costs for forest management. An Order in Council finalizing this FMA will be approved later this month.

For more information, please contact:

Alberta Treasury
Director Communications
Trish Filevich
Telephone: (780) 427-5364

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