June 22, 2018
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New York investment firms to purchase Madawaska paper mill

John Clarke Russ | BDN
John Clarke Russ | BDN
A view from Edmundston, New Brunswick, of the papermaking mill in Madawaska in 2011.
By Whit Richardson, BDN Staff

MADAWASKA, Maine — The majority owner of Twin Rivers Paper Co. plans to sell its stake in the company to a pair of New York area investment firms.

Brookfield Asset Management, based in Toronto, will sell its 51 percent controlling interest in Twin Rivers Paper to Blue Wolf Capital Partners, a private equity firm in New York City, and Atlas Holdings LLC, an investment and holding company based in Greenwich, Conn., according to Louise Merriman, director of communications for Twin Rivers Paper.

The acquisition is expected to be complete within three weeks. Terms of the agreement were not disclosed.

Twin Rivers operates a paper mill in Madawaska, a pulp mill across the border in Edmundston, New Brunswick, and a lumber mill in Plaster Rock, New Brunswick. The company’s corporate office, though, is in South Portland, Merriman said on Tuesday.

Previously known as Fraser Papers Co., that company filed for bankruptcy in 2009, emerging in April 2010 as Twin Rivers.

Twin Rivers employs 1,172 people, with 622 of those in Maine and 550 in Canada, Merriman said. The massive majority of those 622 Maine employees work at the Madawaska mill, which produces paper used in packaging, label and publishing applications, she said.

Blue Wolf and Atlas Holdings have been speaking to Brookfield Asset Management about buying its 51 percent controlling stake in Twin Rivers since 2012, when Brookfield expressed interest in selling the paper company, Merriman said.

Blue Wolf and Atlas Holdings also have offered to purchase the remaining 49 percent of the company from other shareholders “on the same terms and conditions that they are purchasing Brookfield’s stake,” according to a letter Twin Rivers CEO James Gehrman sent to customers on Tuesday.

“It will be up to the owners of that 49 percent to determine whether they want to sell their shares,” he said.

The acquisition is good news for Twin Rivers, Gehrman said.

“[Blue Wolf and Atlas Holdings] bring a reputation for building sustainable businesses and deep operating expertise,” Gehrman wrote to customers. “They have been engaged in an operational and market review of Twin Rivers for almost a year, and have developed ambitious plans to strengthen the company.”

Reached late Tuesday, the managing partners behind Blue Wolf and Atlas Holdings told the Bangor Daily News their plans include expanding the Madawaska mill’s product offerings.

“We’re very impressed by the success that the company has had over the past several years in increasing its business in food packaging products, in the label business, and in the pharmaceutical businesses,” said Adam Blumenthal, managing partner of Blue Wolf.

He added that the mill is “exceptionally good” at producing lightweight papers needed for these types of applications.

“Our focus on the pulp and paper contracts will be to find ways to expand that part of the business by making those more efficiently and effectively and by really focusing on further grade development,” Blumenthal said.

Tim Fazio, managing partner of Atlas Holdings, added that a strength of Twin Rivers’ Madawaska mill is its products serve diverse markets “not subject to electronic substitution” — meaning the demand for paper in those markets isn’t being slowly eroded by the Internet.

On Tuesday afternoon, Madawaska Town Manager Christina Therrien said she was unaware of any specific plans having to do with the mill’s future, adding she’d only heard about the deal earlier that day.

“I got a call this morning at about five [minutes] to 11 that a press release was coming out at 11,” she said. “I really don’t have any information beyond what was in that release.”

A series of property tax valuation reductions beginning in 2010 granted by the town to Twin Rivers has had a significant impact on the municipal and school budgets with the valuation assessed by the town dropping from $170 million in 2010 to an assessment of $85 million for 2013-14.

In December, mill officials notified the town they were seeking an additional valuation abatement to bring the facility’s overall value to around $40 million with an appeal to the state board of property tax review.

That review is ongoing and Therrien said she is unsure how Tuesday’s announcement will affect it.

“I am very interested in meeting with the key personnel to talk to them about their long-term plans,” Therrien said. “The town of Madawaska continues to be hopeful that the new company will make future investments that will ensure the sustainability of the mill.”

Both Blue Wolf and Atlas Holdings are long-term investors in the pulp, paper and building materials industries. Between them, they own several companies in those spaces, including Finch Paper in Glens Falls, N.Y., which produces uncoated freesheet paper; Soundview Paper Co., which produces tissue products at locations in New Jersey and Vermont; and Wood Resources, which is based in Louisiana and produces plywood, according to Gehrman’s letter.

“This is a situation where we can leverage our knowhow and expertise to, over time, make this a more productive, successful business that will be a good commercial partner for the whole region,” Fazio said.

Concerning the overall state of the paper market, and the fact Twin Rivers is only three years removed from bankruptcy, Fazio said he was confident about the company’s future.

“I think from a historic perspective, what we’re good at is making winners out of assets that have had some challenges by being very active owners of the business,” he said.

He couldn’t speak directly to why the company — then known as Fraser Papers — filed for bankruptcy, but suggested the slowdown in new housing construction in the United States was likely a contributing factor. The company owns a lumber mill in New Brunswick, which not only provides lumber for the construction industry, but is also a source of low-cost material for its pulp mill.

“The hard struggle they’ve had through the last several years have been mitigated by the housing recovery,” Fazio said.

The sustainability of Twin Rivers operations was also addressed by Jon Geenen, the international vice president of the United Steelworkers of America, in a news release distributed Tuesday. The United Steelworkers of America represents the workers at Twin Rivers’ Madawaska mill.

“We welcome this change of ownership, to a group we know well,” Geenen said in a statement. “We expect the new owners will be dedicated to ensuring the sustainability of this company into the future.”

Gov. Paul LePage also offered a vote of confidence in the companies’ ability to support Maine’s natural resources economy going forward.

“We welcome Blue Wolf and Atlas to our state,” LePage said in a statement. “These investors have a track record of successful change in forest products companies, and we look forward to working with them as they implement their strategy.”

BDN writer Julia Bayly contributed to this report.

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