PaperAge Magazine

Cascades Acquires White Birch Paper's Idled Bear Island Newsprint Mill in Virginia for $34.2 Million

Plans to invest between $275-$300 million to convert the facility to recycled containerboard production.

Bear Island paper mill The Bear Island mill's newsprint paper machine presently located on the site will be reconfigured to produce high quality recycled lightweight linerboard and medium for the North American market.

July 26, 2018 - Cascades Inc. announced the acquisition of the White Birch Paper's Bear Island paper mill in Virginia for a cash consideration of US$34.2 million. The newsprint paper machine presently located on the site will be reconfigured to produce high quality recycled lightweight linerboard and medium for the North American market. During the period prior to the conversion, White Birch will temporarily operate the site as a newsprint mill, under a 27-month lease.

The new machine is expected to have an annual production capacity of 400,000 tons and construction costs on a per ton basis that are competitive with similar conversion projects. As presently contemplated, the conversion would require an estimated investment of between US$275 and US$300 million, with production expected to begin in 2021. Details of the project will be announced when plans are finalized and approved by the Board of Directors, which is expected in the course of 2019.

Commenting on the project, Mario Plourde, CEO of Cascades, stated, “This project is directly in line with the goals of our strategic plan which include, among other things, investing in our core sectors of packaging and tissue through modernization, and expanding our geographical footprint.

“In addition to the paper machine that is particularly well suited for conversion, the Bear Island site is strategically located for raw material sourcing and logistics. Based on the success of our Greenpac Mill, we expect this to be a highly competitive facility that will significantly contribute to the success of our containerboard operations by supporting our geographic expansion in the US market, in addition to generating solid returns for our shareholders."

White Birch Paper in mid-2017 closed the mill due to declining demand for newsprint and difficult market pricing. Before it closed, the mill produced about 240,000 metric tons of newsprint annually and employed about 165 workers.

Charles Malo, COO of Cascades Containerboard Packaging explained, “The Bear Island site has several advantages including access to an experienced workforce with expertise in paper making. Moreover, the site provides a platform for continued growth through downstream converting capacity. It will also allow us to better serve our customers and to expand our market share by increasing our capacity to provide clients with high quality recycled lightweight linerboard similar to what we produce at our Greenpac Mill.

“From a consolidated standpoint, the Bear Island acquisition costs will fall within the previously announced capex envelope for 2018. With Cascades' continued focus on projects like Bear Island aimed at modernizing production facilities in our core sectors of packaging and tissue, it is expected that capital expenditures in 2019 will remain at a level similar to 2018, subject to Board approval.

“The Company expects cash flow to remain solid over the coming years as business conditions in North America and in Europe are projected to remain healthy, and gradual improvements are expected in the Tissue segment in the medium term as market conditions begin improving and recent investments generate positive momentum. Cascades is committed to successfully executing this conversion plan while simultaneously maintaining a healthy balance sheet and a judicious focus on returning cash to our shareholders.”

Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. To learn more, please visit: www.cascades.com.

SOURCE: Cascades, Inc.