MADAWASKA, Maine — New loan guarantees, credit extensions and revolving credit insurance deals granted to Twin Rivers Paper Co. LLC Friday afternoon by U.S. and Canadian creditors are the surest sign yet of the former Fraser Papers’ stable emergence from bankruptcy protection, its CEO says.
Finance Authority of Maine, Business New Brunswick and Canadian Imperial Bank of Commerce told executives for the lightweight specialty packaging and publishing papers manufacturer that they would grant the credit enhancements shortly before the close of business Friday, CEO Jeff Dutton said.
Business New Brunswick will provide a loan guarantee while FAME has agreed to provide loan insurance. Canadian Imperial Bank of Commerce, the company’s current lender, also has approved an extension and amendments to Twin Rivers Paper’s existing revolving credit facility, company officials said.
“This support from FAME and BNB and the continued support of CIBC are expected to provide the momentum to allow us to continue towards our strategic objectives while affording greater financial flexibility to manage our business,” said Wayne Johnson, the company’s vice president of finance.
“It’s a total financing package that I would say is significant. Our business is generating positive cash flow and earnings,” Dutton said, though he declined to disclose any specifics of the deals or the company’s financial status. “As we have come out of bankruptcy protection since April 2010, we have managed to remain current with all of our credit suppliers. There is no issue there.
“This is about repositioning the company and continuing to invest strategically through the businesses’ cycles and continuing to grow the business,” Dutton added. “It is all around assuring our customers and suppliers that the business is very healthy and they should not be concerned. If anything, they ought to be encouraged about partnering with us for the future.”
Spokespeople for the lenders could not be reached for comment on Saturday.
Twin Rivers employs about 1,500 workers at its Madawaska mill and interconnected pulp mill in Edmundston, New Brunswick, and its sawmill in Plaster Rock, New Brunswick, Dutton said.
Signs of the company’s continued health, Dutton said, include its having as of Friday booked several weeks of confirmed orders for five operating machines at the Madawaska mill, which has eight machines.
The full manufacturing backlog is unusual for December and January, when the machines are often idled for as much as 20 percent of their total availability, Dutton said.
Twin Rivers is also completing $23 million in “green” energy investments designed to improve the company’s efficiency and lower its energy costs. Company workers also have developed alkaline-free extraction from pulp that saves on pulp and paper bleaching and energy costs, Dutton said.
“We think as a result of all this we will begin to save well in excess of $10 million once the [energy] projects are finished in March,” Dutton said.
Twin Rivers also has diversified the products produced by its No. 8 machine in Madawaska, which was designed to make telephone-directory paper, to include specialty uncoated packaging papers for bags used by retailers and food processors, Dutton said.
About 10 percent of the machine’s operations are devoted to that product, with plans to bring that number up to 30 or 40 percent in the next few years, Dutton said.
“With the five machines we have, we are making almost as much as we made when we had eight machines running back in 2006. That’s huge,” Dutton said. “I am as comfortable as I could have imagined I could have been, realizing what the business was facing just a few short years ago.”