Resolute to Sell Catawba Paper and Pulp Mill to New-Indy for $300 Million
Resolute's Catawba operation includes a kraft mill and a pulp dryer to produce market pulp, a thermomechanical pulp mill as well as a lightweight coated paper machine, PM 3. The facility currently employs 460 people.
Oct. 3, 2018 - Resolute Forest Products Inc. [on Oct. 2] announced that it has entered into a definitive asset purchase agreement with New-Indy Containerboard, LLC ("New-Indy") for the sale of its Catawba, South Carolina, paper and pulp mill, for a total purchase price of about US$300 million, consisting of $260 million in cash, subject to customary closing adjustments, and the assumption of approximately $40 million of balance sheet liabilities, largely net pension benefit obligations.
Catawba's operation includes a kraft mill and a pulp dryer to produce market pulp, a thermomechanical pulp mill as well as a lightweight coated paper machine. The facility currently employs 460 people.
In June of 2017, Resolute idled one of the mill's two specialty paper machines, PM 2, which removed about 193,000 metric tons per year of papermaking capacity. The mill's other machine, PM 3, produces lighweight coated paper grades.
Under the terms of the asset purchase agreement, New-Indy will offer employment to Catawba employees effective upon closing of the transaction, which is expected at or around year-end. The sale is subject to certain closing conditions.
"This transaction will allow us to realize significant value for an asset whose greatest earnings potential lies with the investment in and diversification of the mill's operations, as proposed by New-Indy," stated Yves Laflamme, president and chief executive officer of Resolute. "We are pleased that the mill will continue to operate and benefit the local community, both economically and socially."
In a press release, New-Indy said, “Going forward, we are excited about the prospects for this mill to produce a diverse array of products from existing offerings like market pulp, lightweight coated papers and specialty grades to new offerings of high-quality, virgin, ultra-lightweight linerboard. The Catawba Mill will position New-Indy to fill a significant void in the domestic and international markets for these products.”
Laflamme noted, "We expect to use the proceeds from this asset sale to further reduce our net debt and improve shareholder value. We will continue to explore high-return strategic opportunities to grow our core businesses in line with our transformation strategy. Over the coming days, we will communicate with our customers to discuss the impact of the transaction and the transition of supply for their orders of lightweight coated paper and market pulp."
New-Indy is an independent manufacturer and supplier of recycled containerboard to the corrugated box industry. The company was formed in 2012 as a joint venture by The Kraft Group, LLC and Schwarz Partners, LP.
Headquartered in Ontario (California), New-Indy operates manufacturing facilities in Ontario and Oxnard (California), Peoria (Illinois) and Hartford City (Indiana), along with a recycling facility in Kendalville (Indiana).
About Schwarz Partners, LP
Based in Indianapolis, Indiana, Schwarz Partners, LP is a privately owned company with a focus on corrugated products and logistics. The Royal Group, the packaging division of Schwarz Partners, services customers in the automotive, agriculture, industrial manufacturing and consumer goods industries throughout North America and consists of 33 locations, 12 of which are corrugated box and sheet plants.
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, newsprint and specialty papers, which are marketed in close to 70 countries. The company owns or operates some 40 manufacturing facilities, as well as power generation assets, in the United States and Canada. To learn more, please visit: www.resolutefp.com
SOURCE: Resolute Forest Products Inc.