Neenah Paper to Transfer Terrace Bay Pulp Mill Operations
Aug. 9, 2006 - Neenah Paper, Inc. yesterday said it has signed a definitive sales agreements with Terrace Bay Pulp Inc. and Eagle Logging Inc., members of the Buchanan group, to transfer the company's Terrace Bay pulp mill and the company's woodlands assets. A tentative agreement between the parties was announced in early May.
Pursuant to terms of the final agreement, Terrace Bay Pulp Inc. will assume responsibility for the Terrace Bay operations, including existing employee and other contracts, and certain assets and liabilities related to the operation. The assets of the company's woodland operations will be transferred to Eagle Logging Inc. Neenah Paper will make a cash payment of approximately $18 million and retain certain working capital amounts, primarily accounts receivable, finished inventories and accounts payable, as well as employee liabilities for pension, long-term disability and post- employment medical and life insurance for retirees.
In accordance with the agreement, Neenah Paper will initiate plans to curtail and settle its Ontario, Canada defined benefit pension plan. Estimated cash costs related to this settlement are $18 million, with an initial payment of $11 million anticipated in the third quarter.
"This agreement represents a win for all parties, including Neenah Paper's shareholders, the workforce at Terrace Bay and their communities, and also Buchanan Forest Products," said Sean Erwin, Chairman and Chief Executive Officer. "It allows the mill to continue operating and cash requirements are substantially lower than if we had proceeded to close the mill. In fact, one-time costs have been largely funded through a drawdown of working capital this year. Neenah Paper is now in a position of added financial flexibility and strength and can focus on growing our core paper businesses."
It is anticipated that the transaction will close in August.
SOURCE: Neenah Paper, Inc.
See related story:
- Neenah Paper Working Deal to Transfer Terrace Bay Mill Operations (05/09)