Publication: Pulp & Paper Magazine
Issue: June 1, 1996

TISSUE

K-C to sell stake in Scott Canada

Kimberly-Clark Corp. said it plans to sell its 50.1% interest in Scott Paper Ltd. (SPL) of Canada later this year, raising the specter that K-C could in the future be competing with its former company. K-C became the new controlling shareholder of Scott Canada as a result of the $9.4-billion merger last year with Scott Paper Co. Scott acquired a controlling interest in 1954 and in return, SPL had the exclusive right to manufacture and market Scott Paper brands there. Kimberly-Clark has a wholly owned Canadian subsidiary in addition to the Scott shares, which operates independently of SPL.

In a news release, Wayne R. Sanders, K-C chairman and CEO, said K-C could not justify buying the remaining minority interest in the company "given the cost and the unfavorable impact of the divestitures required to merge our Canadian operations." The company said that Canadian authorities had suggested that for competitive reasons, K-C would have had to divest several businesses, including White Swan bath tissue, Baby Fresh baby wipes, and Scotties facial tissue, as well as a related tissue mill. The sale is expected to take place later this year. Kimberly had said earlier it would either buy the 49.9% of shares it does not already own, or sell its stake.

For SPL, the announcement brings up the question of what will happen to the several best-selling brands it markets but does not own, such as Scotties facial and Cottonelle bath tissue. In an interview with the Financial Post B.I.P. Canada, SPL chief executive Lee Griffith said the Canadian company may seek to keep rights to those brands. Scott Canada owns the White Swan and Purex brands. In a news release, Griffith said he was pleased with the decision and "we look forward now toward a quick resolution."

Speculation on possible buyers for the K-C stake centered on Procter & Gamble, the Post said.

K-C also announced last Friday its board of directors has approved the sale of its remaining 20% interest in Midwest Express Holdings Inc. K-C will sell the stake, which consists of 1,288,571 common shares, through a secondary public offering. The company expects to file in mid-May with the Securities and Exchange Commission.

K-C is ready to roll out Kotex brand feminine hygiene products in China. The company already has a China joint venture with Handan Comfort group to manufacture that country's leading brand of feminine pads, Comfort & Beauty. The launch pits K-C's Kotex premium products against P&G's Whisper brands in a market estimated at $100 million to $150 million.

Fort Howard Corp. has begun shipping tissue products from its new joint-venture converting operation in China to retailers in the Shanghai metropolitan area. Fort Howard and CIMIC Holdings Ltd. each own 50% of the joint venture, which markets premium consumer facial and bath tissue and napkins. n

 

Statler mill to reopen under new ownership

One of three idled tissue machines at the former Statler Tissue Co. mill in Augusta, Maine,was expected to be restarted in May, following purchase of the company by financier Sam Posner. In addition, the 50-year-old mill may get a new deinking facility.

Posner, of Long Island, N.Y., and Boca Raton, Fla., purchased the company out of Chapter 11 bankruptcy for $10 million. The deal closed Apr. 11 after a prior purchaser approved by the U.S. Bankruptcy Court, JLJ Recycling, failed to close. Posner, who had been working with JLJ, then stepped in to become the owner along with several partners. He will operate the mill under the Tree Free Fiber Co. name.

Sources said initially one machine will be started up to produce about 60 tpd of tissue. Later the mill is expected to produce deinked market pulp. Capacity was formerly 100 tpd of facial and bath tissue and paper towels, and 100 tpd of deinked market pulp. The mill has been shut down since February 1995.

Thermo Fibertek Inc., of Waltham, Mass., will supply $50.5 million in engineering, procurement, and construction services to Tree Free for a new paper recycling facility, contingent upon Tree Free receiving permits and securing $80 million in financing. One possible source is the Finance Authority of Maine, which is expected to issue tax-free bonds, Thermo Fibertek chief executive William A. Rainville said. Tree Free would own and operate the proposed facility and incorporate Fibertek systems to make high-grade pulp from mixed office waste. Production could reach 200 a.d. tpd.

 

 

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