Catalyst Paper Agrees to Sell Its Two U.S. Mills to Nine Dragons for $175 Million
The mill in Rumford, Maine is a fully-integrated pulp and paper mill with three paper machines with a combined annual capacity of approximately 550,000 tonnes. The mill also operates two kraft pulping lines that produce both hardwood and softwood grades.
May 25, 2018 - Catalyst Paper announced today that it has entered into a Sales and Purchase Agreement with ND Paper LLC, a wholly owned subsidiary of Nine Dragons Paper (Holdings) Ltd. for the sale of Catalyst's U.S. operations to ND Paper for US$175 million.
Upon the closing of this transaction, ND Paper will acquire Catalyst's Rumford, Maine and Biron, Wisconsin mills along with the associated staff at the company's U.S. operations center in Dayton, Ohio. Catalyst has agreed to provide transition support services to ND Paper to assist with the development of certain operational and administrative functions required for the two U.S. mills.
“We're proud of what our employees have accomplished at our Biron and Rumford mills and our Dayton operations center. Their hard work and dedication have vastly improved these operations,” said Ned Dwyer, Catalyst President and CEO.
“This transaction allows Catalyst to re-pay a significant portion of our debt and focus on our British Columbia operations,” Dwyer added.
Yan Cheung, Chairlady of Nine Dragons, said, “We are very pleased to welcome the Rumford and Biron mills to the Nine Dragons family. We are committed to making these mills more competitive on a global scale, while staying true to our core values as an environmentally friendly and socially responsible enterprise with utmost respect for our employees. We look forward to working with the teams and communities in Maine and Wisconsin as we embark on this next phase of expansion together.”
According to Nine Dragons, the acquisition is an upstream integration of the company's current business and is an important step in executing its global fiber sourcing and customer strategy.
The mill in Rumford is a fully-integrated pulp and paper mill with three paper machines with a combined annual capacity of approximately 550,000 tonnes. The production lines are capable of producing coated one-side, coated freesheet and coated groundwood grades. The mill also operates two kraft pulping lines that produce both hardwood and softwood grades and have excess production capacity beyond internal needs, selling approximately 120,000 tonnes of kraft pulp to the market.
The mill in Biron is a pulp and paper mill consisting of two paper production lines with a combined annual production capacity of 340,000 tonnes of coated groundwood grades.
The deal is expected to close by the end of the second quarter upon the favorable vote of Catalyst's shareholders, with a meeting of shareholders scheduled for June 11, 2018.
Catalyst noted that pursuant to a Lock-Up Agreement, the three major shareholders of the Company, aggregating approximately 87% of the outstanding shares, have agreed to vote in favor of the transaction at the meeting.
Catalyst Paper manufactures diverse papers such as coated freesheet, coated one side (C1S), flexible and industrial packaging, coated and uncoated groundwood, newsprint, directory, as well as market pulp.
ND Paper LLC is a wholly-owned subsidiary of Nine Dragons Paper (Holdings) Limited. Nine Dragons is the largest containerboard producer in China and Asia and a leading paper product manufacturer globally. It is primarily engaged in the production and sale of a broad variety of packaging paperboard products, including linerboard, high performance corrugating medium, coated duplex board, as well as recycled printing and writing paper and specialty paper. It operates nine mills and 39 machines with total annual production capacity of over 14 million tonnes.
SOURCE: Catalyst Paper and Nine Dragons