| PAPER INDUSTRY NEWS - JUNE 2002 |
This page contains pulp and paper industry news for June 2002
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NEWS JUNE 2002
Nexfor Completes Deal for NH Mills
June 3, 2002 - Nexfor Inc. on Friday finalized the acquisition of a 200,000-ton/year paper mill at Gorham, New Hampshire and a 265,000-ton/year hardwood kraft pulp mill at Berlin, New Hampshire.
"The Berlin and Gorham operations are a unique, strategic opportunity to further grow our specialty paper grades, strengthen our competitive position and improve our financial performance," said Dominic Gammiero, Nexfor President and Chief Executive Officer.
Mr. Gammiero added the Berlin-Gorham operations are an excellent strategic fit with Nexfor's specialty paper operation at Madawaska, Maine, and provide Nexfor with a high level of integration and attractive fiber supply.
Eighty percent of Gorham's production will be in lightweight opaque, technical specialties, trade book and commercial printing papers that build directly on products currently produced by Nexfor, and in which the company has an established, market niche. The remaining 20 per cent are profitable, industrial-quality towel products.
The Berlin and Gorham assets also include six hydroelectric facilities, with a capacity of 31 megawatts of power, located along a 10-mile stretch on the Androscoggin River. The power facilities have been sold to Great Lakes Hydro Income Fund for US$31.5 million, equal to 100 per cent of the cost of the total acquisition.
Nexfor will invest US$14 million in capital improvements in the Berlin- Gorham operations over the next two years. An additional US$18 million in working capital will be required to start up the operations.
Mr. Gammiero said the acquisition would be accretive to Nexfor's results in 2003 when the operations are expected to be at full production.
The mills, which have been shut since August, 2001, will be restarted in phases over the next 12 months. Three of Gorham's five paper machines will begin production in June, and the remaining two machines will begin production in the fourth quarter of 2002. Approximately 300 people will be rehired at the outset.
The pulp mill will be restarted in 2003 following completion of production improvements.
At full production, approximately 700 employment positions will be filled. The Company has negotiated a six-year agreement with the union (PACE) to ensure a positive labor climate.
SOURCE: Nexfor Inc.
Stora Enso starts prefeasibility study in China
June 12, 2002
Stora Enso considers Guangxi a promising region for the forest products industry and a good source of raw material. Guangxi is a rapidly developing area where great emphasis will be put on sustainable and environmentally sound development of forest plantations and the pulp and paper industry.
This project is in line with Stora Enso’s aim of having access to the most competitive fibre from socially and environmentally sound sources.
Stora Enso sells shares in Billerud
June 13, 2002
Stora Enso has today sold most of its share holding in Billerud AB in a secondary market transaction. 18 522 300 shares were sold for a total amount (after fees and expenses) of EUR 182 million, which represents 29.5 percent of the share capital and votes in Billerud AB. The sale of shares will result in a capital gain of EUR 77 million to be realised in 2Q 2002.After the completion of sale Stora Enso will own a total of 300 000 shares in Billerud AB, which represents 0.5 percent of the share capital and votes in Billerud AB.
Abitibi-Consolidated Spins-off St-Felicien Pulp Mill
MONTREAL, June 14, 2002 - Abitibi-Consolidated Inc. said that it has filed a preliminary prospectus with securities and regulatory authorities throughout Canada for an initial public offering of units of a newly created fund - SFK Pulp Fund. The Fund has been created to acquire Abitibi-Consolidated's northern bleached softwood kraft (NBSK) pulp mill located in Saint-Felicien, Quebec.
Following the offering, and if the over-allotment option is not exercised, Abitibi-Consolidated will continue to own an indirect minority interest of 49% in the Fund. Abitibi-Consolidated's interest in the Fund will be subordinated, in respect of monthly cash distributions, to the Fund units offered to the public until December 31, 2003.
The mill manufactures approximately 340,000 metric tonnes of high-quality NBSK pulp annually and is one of the lowest-cost and most profitable producers of NBSK pulp in North America.
"We are confident that the skills and experience of the mill's management and employees will make a success of this new venture," said John Weaver, President and Chief Executive Officer. "This transaction will improve our financial flexibility and allow us to get fair value for this quality asset, which was not fully integrated with our other activities," concluded Weaver.
At the closing of the transaction, Abitibi-Consolidated will enter into a 20-year fibre supply agreement with the mill to maintain its current supply of fibre. The Fund has obtained commitments for $125 million in credit facilities from a syndicate of Canadian chartered banks, subject to customary conditions, of which $100 million is expected to be drawn at closing to fund in part the acquisition of the mill. The final prospectus is expected to be filed by early August and the closing of the transaction is subject to customary conditions and approvals.
The underwriting syndicate is being co-led by CIBC World Markets Inc. and Scotia Capital Inc. and also includes National Bank Financial Inc., RBC Capital Markets and UBS Bunting Warburg Inc.
ABOUT THE SAINT-FELICIEN MILL
The mill is located in Saint-Felicien, Quebec, approximately 450 kilometres
north of Montreal in the Lac-Saint-Jean region and employs approximately 327
people. The mill manufactures high-quality NBSK pulp and is one of the
lowest-cost producers of NBSK pulp in Canada, where most North American NBSK
pulp mills are located. Management believes that the mill is also one of the
lowest-cost and most profitable producers of NBSK pulp in North America.
The Saint-Felicien mill began production in 1978 with an initial capacity of approximately 670 metric tonnes per day. Improvements to the mill over the years have allowed for an increase in capacity to approximately 1,000 metric tonnes per day, contributing to maintaining the mill's competitive cost position and improving the quality of its product. The mill has achieved ISO 9002 certification with respect to its quality management programme as well as ISO 14001 certification with respect to its environmental management system.
The mill supplies NBSK pulp to various sectors of the paper industry for use in products such as lightweight coated papers, groundwood specialities, supercalendered grades, high-quality woodfree coated grades, uncoated papers and premium tissues.
SOURCE: Abitibi-Consolidated Inc.
International Paper Plans to Close Hudson River Mill
June 18, 2002 - International Paper said that it has decided to close its Hudson River mill in Corinth, NY., in the fourth quarter of 2002. During this time the mill will be for sale.
"We have a strong history of papermaking at Hudson River and a highly skilled workforce, however, the sluggish economy, coupled with steeply reduced demand has hindered the process of positioning the mill to compete effectively," said LH Puckett, senior vice president for IP's coated and supercalendered papers business. "This mill continues to be the highest cost machine in our coated papers system, and despite our efforts, we could not develop a plan for the mill to support our overall coated paper business."
"Our employees have worked tirelessly through a paper machine shutdown last year and very tough economic times," said Peter Connery, mill manager. "Throughout considerable uncertainty over the last several years, Hudson River employees have consistently performed in an exemplary fashion."
The Hudson River Mill is a coated paper mill producing approximately 100,000 tons of coated groundwood and free sheet paper grades as well as a range of specialty products.
The mill's 290 jobs will be eliminated as a result of the closure.
SOURCE: International Paper
M-real Sells Stake in Albbruck Paper Mill to Myllykoski
June 20, 2002 - European paper and board producer, M-real, has sold its 50% stake in Papierfabrik Albbruck GmbH & Co.KG of Germany to Myllykoski Group. The deal is based on the option agreement concluded between M-real and Myllykoski in 2001.
M-real said that the transaction price was 235 million euros and the capital gain on the sale is about 160 million euros.
The Albbruck paper mill has an annual production capacity is 270,000 tons of coated magazine paper.
SOURCE: M-real
Kimberly-Clark Completes Acquisition of K-C Australia
June 28, 2002 - Kimberly-Clark Corporation said that it has completed the purchase of the remaining 45 percent stake in its Australian subsidiary, Kimberly-Clark Australia Pty. Ltd. from Amcor Limited.
In mid-2001, the company increased its ownership in K-C Australia from 50 percent to 55 percent and, under terms of the agreement with Amcor, its joint venture partner since 1963, the price to complete the acquisition was set at A$697.5 million (approximately US$390 million). The purchase price was paid in cash, funded by current cash flow and an increase in short-term borrowings.
Kimberly-Clark also reiterated its expectation that the transaction will be accretive to earnings in the second half of 2002 by approximately one cent per share. As previously announced, the company terminated Australian dollar forward contracts in May 2002 that hedged currency exposure for the transaction. Over the duration of the contracts, the company recorded net pretax gains of approximately $10 million, including a pretax gain of about $4 million in the second quarter of 2002.
K-C Australia is a leading manufacturer of tissue, personal care and health care products in Australia and New Zealand. The company holds the No. 1 position in most of its product categories. With six manufacturing facilities and nearly 1,900 employees, the company's annual sales are approximately US$400 million.
SOURCE: Kimberly-Clark Corp.
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