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Midway mill to reopen, villagers meet deadlines

Local investors raise $1 million in 11th-hour deal to revive community's lifeblood
The village of Midway's shuttered sawmill has been saved from foreclosure and demolition after a group of local investors raised $1 million needed to meet a mortgage deadline of Aug. 31.
 
The last-minute deal will give a new lease on life to a mill that has been the community's lifeblood for generations.
 
Boundary Sawmill Inc., formed by local business leaders to buy the mill and pay off its debts, beat the deadline to pay the mortgage after Midway's Heritage Credit Union agreed to advance the needed funds.
 
"The sawmill is going to reopen and it looks like the mortgage is going to be paid by tomorrow," Stephen Hill, a financial adviser from nearby Rossland, said in an interview Tuesday.
 
Hill has been instrumental in the resurrection of the mill.
 
The mortgage is the last remaining link with former owner Fox Forest Products, of Montana, which bought the idled sawmill in 2008 from bankrupt Pope & Talbot but never got it fully operational.
 
Boundary Sawmill Inc. bought the mill earlier in the year from Fox, has paid delinquent taxes and has signed a lease agreement with American lumber company Vaagen Brothers to operate it.
 
"They plan on firing her up mid-October," Midway Mayor Randy Kappes said in an interview. "What this means to the town is financial security. It means our future."
 
He said the mill is expected to employ 35 people and, in a town of 630, that's a huge economic boost. There will be dozens of other spinoff jobs, he said.
 
Midway is in the Kettle Valley, on Highway 3, midway between Osoyoos and Grand Forks.
 
The mill will employ younger working families, Kappes said, people who will use Midway's services and shop there. It will mean more children to attend the local schools, which have been struggling with enrolment since the mill closed in 2007.
 
Kappes said the mill is the village's largest taxpayer - it accounts for 42 per cent of the tax base - and its vital role in the community prompted the village to become a shareholder in Boundary Sawmill Inc.
 
"Once the corporation was formed, the village put in a $250,000 investment to get it started," Kappes said.
 
"The village invested because we understood the benefit it would be to the whole area, and the benefit it would be for our tax base. We understood that [re-starting the mill] is a really good manoeuvre to secure the village's future.
 
"This is a longtime mill town and most of the people, or a lot of the people, who still live here worked at the sawmill or had family that worked at the sawmill at one time or another. They were really proud of their sawmill and it really tugged at people's hearts when that thing went down," Kappes said.
 
"There's a lot of sympathy for it and a lot of understanding for what it means to the town."
 
The mill's history predates the Second World War. During the war, employees included interned Japanese.
 
The local investors are reviving the mill's old name of Boundary Sawmill, a company first formed when several small mills were consolidated into one company in 1943.
 
Fox Forest Products had told Boundary Sawmill Inc. that if it was unable to meet the mortgage deadline, the U.S. company would be forced to foreclose to meet its own financial needs.
 
Hill said the financial deadline, coming before the mill is operating, put additional pressure on the search for funds.
 
He became involved in the sawmill's fate while running as the local Conservative candidate in the June federal election. He learned of the mill's troubles while door-knocking in the region in 2010.
 
Hill lost the election but became engrossed in saving the mill - and the town - in the process. He was instrumental in setting up Boundary Sawmill Inc. as a venture capital corporation through the provincial government, so investors would receive a 30 per cent tax credit on their investment.
 
He said that the loan from Midway's Heritage Credit Union is the last hurdle to get the mill up and running.
 
The corporation has attracted more than 40 investors so far, mostly local people. But people from the Prairie provinces to Vancouver have bought shares as well, said Hill.
 
"For some reason, this story has resonated from New Brunswick to Nanaimo," Hill said.
 
The mill was closed when then-owner Pope & Talbot went bankrupt in 2007.
 
It was purchased by Fox Forest Products for $750,000 but the U.S. housing collapse and high Canadian dollar meant it never became fully operational.
 
Boundary Sawmill is leasing the mill to Vaagen Brothers, who will ship the lumber produced across the border, where it will be planed at Vaagen's Colville, Wash., mill and then shipped to Australian and Asian markets.
 
Once the mill is up and running, acquiring timber will be the next challenge. Logs have already started coming in from local woodlots, Kappes said, and the village has applied to the province for a community forest licence to ensure the mill has a long-term timber supply.
 
BY GORDON HAMILTON, VANCOUVER SUN AUGUST 31, 2011ghamilton@vancouversun.com
 
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