Paper Industry January 2003 News

PAPER INDUSTRY NEWS - JANUARY 2003

This page contains pulp and paper industry news for January 2003

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NEWS JANUARY2003

Carter Holt Harvey Sells Chilean Packaging Unit

Jan. 2, 2003 - New Zealand forest products company Carter Holt Harvey Ltd. said that it has sold its packaging business in Chile to a consortium for US$11 million.

The consortium consists of Asesorias e Inversiones Camino Real Limitada, Inversiones y Asesorias Los Cedros Limitada, Ahorro y Rentas La Vendimia S.A. and Inversiones Chinquihue S.A.

Carter Holt Harvey said in a statement the sale will be completed on Jan. 31, 2003.

SOURCE: Carter Holt Harvey Ltd.

Blandin Paper Closes Two Paper Machines

Jan. 8, 2003 - Blandin Paper Co. said that it is closing its two oldest paper machines, PM 3 and PM 4, at its mill in Grand Rapids, Minnesota, effective immediately. The machines were originally built in 1931 and in 1963.

Blandin Paper, a subsidiary of UPM-Kymmene, said the age and productive capacity of the two machines mean they are no longer competitive, irrespective of future investment. The total production capacity of the two machines was 157,000 metric tons of coated groundwood paper.

The company stated that the mill will continue to operate its two newer machines, PM 5, built in 1975, and PM 6, built in 1989.

"Blandin is one of the leading coated groundwood paper mills in North America and both PM 3 and 4 have contributed significantly to the company's reputation as a quality publication papers producer. However, paper production overcapacity continues to be a business reality in North America and we need to focus on our most productive, most efficient, low cost assets," said Joe Maher, Senior Vice President and General Manager of Blandin.

UPM-Kymmene acquired Blandin Paper in 1997. Since then the Group has strongly invested in the complete overhaul of PM 6. After the closures, the paper production capacity at Blandin mill is 336,000 tons of coated groundwood paper. In addition, UPM-Kymmene owns a coated groundwood paper mill in Miramichi, Canada, with a production capacity of 450,000 tons on two machines. The remaining capacity in North America is technically advanced and the average machine size is well above the industry average. UPM-Kymmene will meet the needs of its North American customers with this modern and cost efficient capacity.

In connection with the closings UPM-Kymmene will book immediate write-offs of USD 90 million for 2002. In addition USD 30 million has been reserved for other closing-related costs. Blandi nsaid that the closures will lead to the reduction of approximately 300 of the mill's 800 jobs.

SOURCE: Blandin Paper Co and UPM-Kymmene Corp.

Great Northern Paper Files Chapter 11

Jan. 10, 2003 - According to a report in the Portland Press Herald, Great Northern Paper Co. yesterday filed for bankruptcy protection.

Harry Murphy, the lawyer who filed the Chapter 11 bankruptcy petition, said the company had lined up $25 million in financing that will allow it to call back all or most of the workers and resume production, possibly as early as today.

Great Northern's only shareholder is Inexcon, a Quebec-based consulting firm that bought the company in 1999.

U.S. Bankruptcy Judge Louis H. Kornreich will decide what's next for Great Northern.

Thursday's bankruptcy filing didn't completely shock millworkers.

Harold St. Peter, a millwright, pipefitter and welder at the East Millinocket mill for three years, told the Press Herald it was clear that something was up because the company was so unsure about his work schedule.

He said he worked two days after Christmas and was told he would be called back Jan. 5. Then it became Wednesday, and then, ominously, "You'll know by the end of the week if you'll be back at work," St. Peter said.

Great Northern owes $50 million to Congress Financial and $16 million to Boeing Equipment for credit lines that Great Northern exhausted in December. He said the two companies have agreed to loan $25 million to Great Northern to tide it over while a buyer or investor is sought.

In the bankruptcy filing, Great Northern said there are several conditions on the new financing, including a 60-day reprieve on payment of health insurance benefits for anyone who retired after 1992, elimination of 401(k) contributions, and an exemption from having to pay severance to some workers who may have to be laid off.

Maine's two U.S. senators, Olympia Snowe and Susan Collins, said they would try to help find a buyer or secure permanent financing for the mills.

The company said its 20 largest unsecured creditors are owed about $17 million.

In addition, the company owes $36 million to the Nature Conservancy, which agreed to finance that much debt as part of a deal that transferred 41,000 acres of woodland to the conservation group and put another 240,000 acres under a conservation easement, protecting public access.

The filing has no immediate impact on the landmark conservation deal. The protections secured for 240,000 acres of Maine wilderness will remain in force regardless of the company's future, the environmental group said.

The Nature Conservancy's financing - a $14 million payment and the $36 million low-interest mortgage - helped keep the company running through the end of 2002. The deal will help preserve land near Mount Katahdin and Baxter State Park.

"Had (the bankruptcy filing) happened last summer, all that land could have been sold and subdivided and liquidated," said Kent Wommack, executive director of the Nature Conservancy in Maine.

Wommack said Great Northern asked to skip its first quarterly mortgage payment late last year because of its cash crunch. He said the first payment is now due this spring.

"We are very concerned for the company, but I don't think it will be the Nature Conservancy that pushes Great Northern over the edge. They have other and bigger concerns," Wommack said.

If the company is unable to emerge from bankruptcy, its assets would be sold and apportioned to the company's creditors. Wommack said he believes the company's timberland is valuable enough that the Nature Conservancy will be repaid the mortgage amount if the company is forced to sell its assets.

Murphy said the company has been hit by "a variety of factors" that led to the filing. "A lot has to do with the economy, current paper prices. Sales are down and prices are down," he said.

Last summer, Great Northern laid off 200 workers and shut down a paper machine because it didn't have enough customers.

SOURCE: Portland Press Herald

Smurfit-Stone to Close St. Paul, MN Carton Plant

Jan. 21, 2003 - Smurfit-Stone Container Corp. said that it has decided to discontinue operations at its St. Paul, Minnesota folding carton plant. The facility produces folding cartons for a variety of consumer goods companies.

In a Jan. 17 statement, Smurfit-Stone said the decision was made after careful review of the plant's operations, available capacity within the company's Consumer Packaging division, and current economic market conditions. Additional factors were also taken into consideration including operating costs and strategic fit.

Operations will be consolidated with other Smurfit-Stone folding carton facilities within the division, the company said.

The plant's final day of production is tentatively scheduled for March 15, 2003.

A total of 82 hourly and 20 salaried employees are affected.

SOURCE: Smurfit-Stone Container Corp.

International Paper to Shut Natchez, MS Pulp Mill

Jan. 25, 2003 - International Paper officials yesterday announced to workers at its Natchez, Mississippi pulp mill that it will shutting the doors of the 52-year old mill by mid-2003.

All of the mill's 519 hourly and 71 salaried workers will lose their jobs over the next six months.

IP blamed the closure on a deteriorating market for the chemical cellulose the mill manufactures.

IP's executives have made it clear that they get out of the chemical cellulose business altogether, and Natchez is the only IP mill that makes it, Manager Steve Olsen told The Natchez Democrat. Meanwhile, it will take several days for management and union officials to begin to negotiate severance plans for displaced workers.

IP's latest news follows more than two years during which the was for sale, laid off 142 workers and was taken off the market when no seller was found.

In June 200, IP announced that it was looking for a buyer for the mill, then announced in October 2001 that it would lay off 142 of 728 employees. A buyer was not found and, in February 2002, it took the mill off the market, saying it would instead look for ways to tighten up operations and find potential markets.