Catalyst Paper, the Canadian company that last July said it planned to pump $56 million into a new tissue-making machine to tap what it called a growing market for the product, said Friday it has agreed to sell its Rumford, Maine, and Biron, Wisconsin, mills to ND Paper LLC of Hong Kong for $175 million.
ND Paper, a wholly-owned subsidiary of Nine Dragons Paper (Holdings) Ltd., said the purchase is an important step in its global fiber and customer strategies.
With the acquisition, which is expected to close at the end of the second quarter of this year, Nine Dragons will get access to high-quality virgin fiber and a more secure raw material supply.
The Hong Kong company also said future capital investment to grow the capabilities of both mills in packaging paper and pulp products will help invigorate both states’ economies.
“We are committed to making these mills more competitive on a global scale,” Yan Cheung, chairperson of Nine Dragons, said in a prepared statement.
An ND Paper spokesperson said the investment plans do not include any layoffs at the Rumford mill, which currently has 620 employees.
“We’re focusing our investment now on continuing business as usual,” the spokesperson said.
Catalyst Paper President and CEO Ned Dwyer said in a statement that it was a business decision to sell both mills.
“This will allow us to repay a significant portion of our outstanding debt, and focus on our Canadian operations,” Dwyer said.
The two mills and the associated staff at Catalyst’s Dayton, Ohio, operation are part of the sale.
The Rumford paper and pulp mill has three paper production lines with a combined annual capacity of about 550,000 tons. The machines can produce coated one-side, coated freesheet and coated groundwood grades of paper.
It also has two kraft pulping lines that both make hardwood and softwood grades of paper. The machines have excess production capacity, and can supply about 120,000 tons of kraft paper to the market, according to Nine Dragons.
The Rumford and Biron mills had total sales of $744 million for the year ended March 31 based on unaudited financial data.
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