(RTTNews) - Catalyst Paper (CTL.TO) said that it has settled the arbitration proceeding relating to its 20-year energy services agreement with Island Cogeneration # 2. Inc.

This arbitration was a result of Catalyst's declaration of force majeure under the energy services agreement, due to the permanent closure of its Elk Falls pulp mill in November 2008 as a result of the unavailability of sawdust fibre.

Under the settlement, Catalyst has agreed to transfer to Cogen land currently leased by Cogen upon which its energy facility is located.

Catalyst has also granted certain easements and access rights to Cogen to facilitate the independent operation of the energy facility.

In addition, Cogen has agreed to take steps to eliminate its reliance on Catalyst for certain services and the company has agreed to cooperate with Cogen in that regard.

This settlement terminates the energy services agreement and all of Catalyst's related obligations including its contingent liability for energy not purchased.

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