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SALES AND EARNINGS

 

M&As boost 1998 Canadian earnings

Most Canadian companies’ 1998 financials reflected the impact of consolidation in the country’s pulp, paper, and forest products industry. The biggest winner was MacMillan Bloedel Ltd., Canada’s largest forestry group. Profit from continuing operations before restructuring and other unusual charges was C$123 million for the full year. This was a significant turnaround from 1997, when the company reported a net loss of C$368 million, which included an after-tax charge of C$340 million for restructuring.

A year ago, MacMillan announced a comprehensive restructuring plan aimed at restoring the company to sound financial footing and profitability. Among other things, this restructuring involved laying off 2,700 employees, or 14% of the workforce, exiting the papermaking and medium density fibreboard (MDF) business, downsizing the building materials distribution business and selling other non-core operations, including 50% of the Macmillan Bathurst corrugated packaging operations.

A significant portion of the proceeds from the asset sales was used for debt retirement, said Tom Stephens, the company’s president and CEO. During 1998, more than C$900 million of debt was repaid. The next assets to be sold will be the company’s U.S. containerboard mills in Alabama and Kentucky, said Stephens. As a result of downsizing, total sales in 1998 declined to C$4.2 billion from C$4.5 billion.

At the operating level, weakened demand for lumber in Japan, a major market for MacMillan Bloedel, caused average price realizations to drop 23% during the year. These lower prices, combined with higher wood harvesting costs in British Columbia, drove operating earnings for the solid wood business down C$94 million to C$14 million in 1998. The drop in earnings overshadowed significant cost savings of more than C$90 million in logging and sawmill operations. Earnings from oriented strandboard (OSB) and other panelboard operations were up C$75 million, primarily due to higher prices and a strong U.S. housing market. Earnings from the packaging segment were C$71 million, up C$49 million from 1997, as a result of increased containerboard prices, which averaged 12% higher than 1997.

Domtar Inc., Canada’s largest producer of fine papers (offset printing and photocopy papers), reported a significant increase in profitability, helped by the inclusion of sales from newly acquired E.B. Eddy Paper Inc. Operating profit for 1998 more than tripled to C$200 million and net income jumped to C$74 million from C$8 million in 1997. The company said average paper prices were lower in 1998 than 1997, but the addition of Eddy, a more favorable U.S. exchange rate, and productivity and cost improvements more than offset the negative impact of lower pricing. Domtar generated C$50 million in cost savings during the year, which exceeded the initial target by C$20 million. Total cost savings over the past two years have reached C$120 million, said the company.

Donohue Inc. also posted impressive financial results in 1998. The Montreal-based producer of newsprint, market pulp and wood products reported net income of C$229 million on net sales of C$2.3 billion, a new record for the company. The results reflect the acquisition in June 1998 of two newsprint mills in the U.S. from Champion International Inc. The acquisition doubled Donohue’s newsprint production capacity and made a significant contribution to the increase in sales.

Labor strikes affected earnings at Abitibi-Consolidated Inc. Abitibi reported a net loss from continuing operations of C$28 million, compared with a 1997 net loss of C$7 million. The loss was largely due to lower production and sales volume resulting from a five-month strike at 11 Abitibi mills in Quebec, Ontario, and Newfoundland. The strike eliminated 772,000 metric tons of newsprint production and 414,000 metric tons of groundwood paper production.

Fletcher Challenge Canada Ltd. also lost considerable production to a nine-month strike that ended in April 1998. The company’s continuing operations incurred a net loss of C$92 million for the fiscal year ended June 30. Net sales plummeted to C$284 million from C$950 million in fiscal 1997. “Our kraft pulp operations faced a difficult startup following the strike and full production was not attained until late May,” said former president and CEO Doug Whitehead. By the end of 1998, production returned to full operation. In the final quarter of the year, the company’s sales of pulp, newsprint and specialty papers were C$278 million, compared with only C$37 million in the 1997 period.

Harmac Pacific Inc. suffered from weak pulp markets and its losses doubled to C$20 million during 1998. Ralph Leverton, company president and COO, said the European benchmark price of northern bleached softwood kraft (NBSK) pulp averaged $462/metric ton in the fourth quarter of 1998, compared to $512/metric ton in the third quarter and $598/metric ton in the fourth quarter of 1997.

Nexfor Inc. (formerly Noranda Forest Inc.) increased earnings by 26% to C$48 million during 1998. Operating earnings for building materials increased to C$126 million from C$94 million, based on higher OSB sales and prices. Earnings for papermaking operations were C$32 million, compared with C$8 million in 1997. Coated groundwood papers had strong performance in 1998, though late in the year competition from European imports and new supercalendered (SC) paper capacity led to weakening prices, said the company. High consumer advertising levels created strong demand for uncoated groundwood papers, Uncoated free-sheet prices were under pressure all year from the effect of high inventories and increased capacity and imports. In 1998, pulp operations lost C$1 million for the full year, C$3 million in the fourth quarter. In 1997 pulp lost C$4 million for the full year.

 

OUTLOOK

 

AF&PA says 1998 production down

Last year was “not a good year” for the U.S. paper industry, a trade group official told the Canadian Pulp and Paper Assn. meeting earlier this year. Production appeared mostly flat, demand slightly improved, import and export trade flows were negatively impacted by the Asian crisis, and prices were down across the industry. Speaking at the meeting was American Forest & Paper Assn. (AF&PA) chairman Rick Holley of Plum Creek Timber Co.

Holley said 1998 marked the first year since 1985 that U.S. paper and board production did not expand. (According to December association statistics, production was down 0.4% to 94.6 million tons.) A preliminary review showed U.S. exports down 6.4% and imports up 6.5%. Printing/writing imports in particular were up about 12%. Although consumption was up 2%, flat production, the trade imbalance, inventory liquidation, and weak pricing hurt manufacturers. “Only a few firms earned their cost of capital,” Holley said.

Pricing eased 3%, according to U.S. Bureau of Labor Statistics data. Holley noted by the end of the year, prices were off an average 15% from 1995 peaks. He said 1999 “looks better” for the industry, noting the decline of the U.S. dollar in relation to the yen and euro, which should help exports. Capacity growth has slowed he said, with a 1% annual increase over the next three years in the U.S. among the slowest rates of growth ever. Inventory liquidation that took place last year, at both mill and customer level, show a stronger demand situation next year, he said.

 

NEWSPRINT

 

Donohue switch to SC at Lufkin mill

Donohue Industries Inc. has announced plans to spend $230 million at its Lufkin, Texas, mill to meet environmental regulations and increase production of higher-value uncoated groundwood grades. The investment includes shutting three of the mill’s four paper machines and replacing them with one machine of roughly equal capacity which will produce supercalendered (SC-B) and highbright printing papers. The installation will make Donohue the only producer of SC papers in the U.S. South. Also included in the investment are modifications to the kraft pulp mill to meet EPACluster Rule regulations.

Donohue has signed a memorandum of understanding with Fletcher Challenge Ltd. subsidiary Terrace Insurances (NZ) Ltd. to buy the paper machine formerly operated by the Gold River Newsprint Partnership in British Columbia. A definitive purchase agreement was signed in March. The 330-in. Beloit Bel Baie III twin-wire former was manufactured in 1988 and has capacity to produce 220,000 mtpy of newsprint. Donohue would not disclose the anticipated purchase price, but sources said it could be in the $25 million to $35 million range. Fletcher Challenge Ltd. told Reuters it expected the sale price to exceed the machine’s $15 million book value.

Following the acquisition, Donohue plans to add a new calender stack and make the necessary modifications to the headbox to begin producing SC-B and high-brights by mid-2000.

“The SC grades have been the fastest-growing segment of any groundwood grades in the past eight years. If we look at our market analysis, these grades should continue to outperform other groundwood grades in the future,” said Gaston Bouffard, Donohue’s executive vice president of sales and marketing. SC-B is commonly used to print newspaper advertising inserts.

The total project cost—including the purchase price of the machine, transportation costs, and construction of a new building to house it—is estimated at $178 million, according to Kim Breese, executive vice president of U.S. operations.

The new machine—No. 8—will replace three Pusey & Jones fourdrinier machines. Following the installation, the machine lineup at the mill will include No. 8 (capacity of 250,000 mtpy of SC-B and high brights), and No. 2, a 244-in Beloit Bel Baie II twin-wire former (capacity of 172,000 mtpy of newsprint). Furnish for the SC-B production will be southern pine sourced from Champion International Corp.’s 1 million acres of timberland in east Texas.

Donohue said the machine shuts and related restructuring will reduce the number of jobs at the mill by 200 over the next two years. Production capacity will decrease by about 37,000 mtpy.

Included in the $230 million is $52 million for upgrades to the kraft pulp mill to comply with Phase I of U.S. Environmental Protection Agency Cluster Rule regulations. The major component of the pulp mill project is to change the pulp bleaching process to eliminate the use of elemental chlorine, Breese said. Phase I takes effect April 2001 but Breese said Donohue expects to complete the project by mid-2000. The mill has capacity to produce 204,000 tpy of semi-bleached kraft pulp and 255,500 tpy of stone groundwood pulp.

 

MARKET PULP

 

Canfor takes charge on Howe Sound pulp

Canfor Corp. has written off its investment and restructuring charges in Howe Sound Pulp and Paper Ltd., after determining that it would not recover its losses. The investment write-off amounted to C$145.9 million, after tax, or $C$2.50/share. Canfor said the decision does not affect the ongoing operations of Howe Sound, a 50-50 joint venture of Canfor and Oji Paper Co. of Japan.

The announcement came in connection with Canfor’s release of fourth-quarter 1998 results. Canfor said it would have a net loss for the fourth quarter of C$148.3 million, compared to a net loss of C$9.4 million for the third quarter and C$50.9 million for the fourth quarter of 1997. It reported operating income of C$26.8 million in the fourth quarter, compared with a loss of C$15.6 in the same period in 1997. For the year, operating income was C$33 million, down from C$56.8 million. Before the write-off of Howe Sound, Canfor generated a net profit after tax of C$8.2 million or C$0.14/share in the fourth quarter.

Canfor said it had discussions with Oji regarding a restructuring. Those discussions have not concluded, but Canfor said it has determined that it will not recover its investment. Howe Sound runs a 320,000 mtpy bleached softwood kraft market pulp mill and a 195,000 mtpy newsprint mill in Port Mellon, B.C. The pulp goes to Oji, other Japanese papermakers, and additional customers. Seventy percent of the lightweight newsprint produced is marketed in Japan and the balance is sold primarily in the U.S.

“From Canfor’s perspective, we will stop consolidating the losses from Howe Sound into our financial statements which will be good news for investors in Canfor,” Canfor president and CEO David Emerson said.

 

Slocan writes off Fibreco B.C. mill

Slocan Forest Products Ltd. said it would not recover its investments in the Fibreco pulp mill at Taylor, B.C., resulting in a net write-off of C$76.1 million. Also, the carrying value of the sawmill facility in Valemount, B.C., was reduced by C$4.8 million. The company will continue to operate these facilities and expects them to operate on a cash break-even basis until market prices improve.

Slocan also announced an agreement with its lenders which will provide a C$150 million, three-year operating loan to ensure the company’s liquidity. The agreement will also defer principal debt payments for three years and write off the deferred foreign exchange loss and financing costs on its $290 million of U.S. denominated debt. The net write-off charge amounts to C$44.2 million.

The company reported a net loss of C$136.2 million for the fourth quarter of 1998 and a loss of C$157.8 million for the year following significant asset writedowns and debt restructuring costs. Slocan’s net loss in 1998 before unusual items was C$9.9 million. The pulp and forestry company had net earnings of C$2.1 million in 1997. Sales in 1998 were C$936 million compared with C$946 million in 1997.

 

Ponderosa Fibres files Chapter 11

Ponderosa Fibres of Washington LP has filed for Chapter 11 protection in the U.S. Bankruptcy Court in Delaware, Reuters reported. Court papers showed its assets and liabilities were each greater than $100 million. Early last year parent Ponderosa Fibres of America said it was planning to restructure the municipal debt on the market deinked pulp (MDIP) mill. A pre-negotiated bankruptcy had been anticipated.

The 265 mtpd greenfield mill in Wallula, Wash., started up in October 1997 after delays, but underwent modifications. It had quality and other problems not dissimilar to those experienced earlier at the Ponderosa Fibres of Pennsylvania Partnership MDIP mill in Northampton, Pa. A number of greenfield MDIP mills have undergone bankruptcy in the past couple of years.

 

Limited restart at Ashdown G-P mill

Georgia-Pacific Corp. (G-P) has restarted its Ashdown, Ark., kraft pulp mill dryer on a limited basis. The Ashdown dryer and a pulp dryer at G-P’s Port Hudson, La., paper mill were shut in July 1998 due to poor market conditions for hardwood pulp. A company spokesman said G-P needs more pulp to meet new external market pulp agreements and was no longer able to fully supply its own internal demands.

G-P will be the sole supplier of virgin pulp—both hardwood and softwood—to Pasadena Paper Co. in Pasadena, Texas, which recently shut its pulp mill. The mill, formerly owned by Simpson Paper Co., had been producing 100,000 mtpy of market pulp (half softwood and half hardwood) and 75,000 mtpy of pulp for internal use. G-P also has some other long-term supply arrangements for market pulp sales.

The spokesman said the running rate at Ashdown would be determined by internal G-P demand; he noted that the new tissue machine at mills in Crossett, Ark., and the rebuild at its Plattsburgh, N.Y., account for some of that demand. The dryer at Port Hudson will remain indefinitely closed.

Ashdown has capacity to make 116,000 mtpy of hardwood kraft and 45,000 mtpy of softwood kraft.

 

Fire curtails Leaf River mill output

Georgia-Pacific Corp.’s Leaf River pulp mill in New Augusta, Miss., was expected to be repaired in three to four months following a fire on Feb. 18, a company spokesman said. It is losing an estimated 270 mtpd of production; when a lime kiln precipitator is rebuilt that should decline to an estimated loss of about 90 mtpd, an informed source said. The 502,000 mtpy mill produces mostly softwood, but every other month it does a hardwood run; this year hardwood is expected to be about one-fifth of production. Aside from the fire, production at Leaf River was reduced by several hundred tons a day last year .

The fire occurred in the lime kiln precipitator. There were no injuries and the rest of the mill continued production during the course of the fire, which was brought under control a few hours after it broke out, a G-P spokesman said. He said the cause of the fire is under investigation.

 

CONTAINERBOARD

 

St. Laurent details capital spending

St. Laurent Paperboard Inc. said it purchased a 49% share of Eastern Container Corp. of Mansfield, Mass., in a $46.8 million deal. An independent Canadian investor holds the remaining 51% share in Eastern Container, which sources said was Toronto-Dominion Bank. Eastern Container operates plants in Massachusetts, New Hampshire, and Ontario, with production capacity of 831million ft² of industrial and specialty packaging, including triple wall containers, point-of-purchase displays, and packaging for the retail and high technology sectors. With an eye on becoming a more integrated producer, St. Laurent will provide Eastern Container plants with 100% of their containerboard based on a seven-year agreement. St. Laurent also can acquire the remaining majority share in the future.

In other news, St. Laurent plans to open a sheet plant in the Columbus, Ohio, area by July, the company said during the Canadian Pulp and Paper Assn.’s annual conference in January. The plant would be key to following two St. Laurent strategies: increasing integration and using microflute sheets. Last year, Columbus was the fifth-largest growth market in the U.S. for corrugated container shipments, according to Fibre Box Assn. figures through November 1998.

The company also plans to move quickly ahead with plans for installing a soft-nip calender on the No. 3 machine at its La Tuque, Que., mill so that it can produce a specialty grade—lightly coated white top linerboard. Plans call for producing the clay coated white top by the end of the first quarter 2000, said Stephane Rosseau, the La Tuque mill manager and a vice president with St. Laurent.

The machine would be the first in North America to put coating on white top linerboard with a Valmet SymSizer, Rousseau said. The company wants to produce 50,000 tpy of lightly-coated white top by the year 2005. The project will not increase capacity on the No. 3 machine. An estimated 70,000 to 80,000 tons of lightly coated white top is exported into the U.S. annually.

 

G-P to acquire packaging plant

Georgia-Pacific Corp. (G-P) plans to acquire the packaging plant of Connelly Containers Inc. of Bala Cynwyd, Pa. G-P primarily wants the plant because it can produce heavy-duty corrugated packaging, including triple wall corrugated products. The facility also has four-color printing capabilities. The purchase price was not disclosed and the deal was to be completed at the end of the first quarter.Weyerhaeuser Co. announced plans to buy the Connelly plant in August, but a final agreement was not reached.

 

Smurfit-Stone closes two plants

Smurfit-Stone Container Corp. will close two plants, a corrugated container plant in Omaha, Neb., and a folding carton plant in El Paso, Texas. The equipment from the two plants will be scrapped or moved to other Smurfit-Stone plants, a company official said.

The Omaha plant was scheduled to stop production on Feb. 15. The plant’s operations will be consolidated with the company’s two corrugated plants in Sioux City, Iowa. The El Paso plant stopped production Apr. 1. Smurfit-Stone Container will keep a sales and distribution center at the plant. The two plants employ 116 workers.

 

Tenneco spins off packaging assets

Tenneco Inc. said it will sell its containerboard and paperboard packaging assets to a Chicago-based investment group for about $2.2 billion in a deal that surprised and captivated various U.S. board industry executives. Madison Dearborn Partners Inc. would become the majority owner of Tenneco Packaging, which will change its name back to Packaging Corp. of America (PCA), a name the Tenneco unit used until 1995. Tenneco would keep a 45% share in the PCA assets, valued at $193.5 million.

The deal, which is expected to close in April, will be financed with $1.86 billion in loans undertaken by PCA with the proceeds paid to Tenneco. Madison Dearborn will pay Tenneco $236.5 million in cash. Tenneco expects to spend about half the cash on reducing short-term debt, and the other half on paying down leases on some mills and timberland.

Tenneco chairman and CEO Dana G. Mead expected an initial public offering (IPO) would be offered for shares of PCA within the next 18 months when the value for the assets increases. But there was speculation that a major, integrated producer would scoop up PCA before any offering could be held.

PCA will be comprised of all of Tenneco Packaging’s containerboard and packaging operations: four containerboard mills with an estimated 1.3 million tpy linerboard capacity and 789,000 tpy of corrugating medium capacity, and 67 converting plants with a total of 39 corrugators.

Tenneco Packaging is the sixth-largest containerboard producer in North America. The Tenneco packaging assets not part of the PCA deal are its specialty packaging and folding carton businesses.

Paul T. Stecko, Tenneco president, will resign from Tenneco to become PCA’s chairman and CEO, but remain a Tenneco director. PCA will be run out of Tenneco’s board and packaging headquarters in Lake Forest,Ill., a suburb of Chicago.

Madison Dearborn was created in 1992 when First Chicago’s venture capital group separated from the bank to operate independently. The mid-size buyout fund also helped form specialty cellulose pulp producer Buckeye Technologies Inc. from Procter & Gamble Co., and has a stake in Bay State Paper Co., which operates an estimated 100,000 tpy paperboard mill near Boston.

 

RECYCLED PAPERBOARD

 

Caraustar to buy Halifax Paper Board

Caraustar Industries Inc. said it has signed a letter of intent to acquire Halifax Paper Board Co., which operates a 100% recycled paperboard mill in Roanoke Rapids, N.C., and a specialty paperboard converting plant in Richmond, Va. The paperboard mill has production capacity of 33,000 tpy and is substantially integrated with the Richmond converting plant. These operations serve customers in the specialty products segment of the recycled paperboard industry. The mill operates a 92-in.-wide cylinderboard machine producing plain and bending chipboard, white lined chipboard, solid black board and other specialty grades. Halifax had consolidated revenues of approximately $17 million in 1998.

Caraustar is the largest producer of 100% recycled paperboard products serving all four of the major markets: tubes, cores and cans; folding cartons; gypsum wallboard; and miscellaneous consumer and industrial converted products. The company operates more than 80 manufacturing facilities, including 15 paperboard mills producing over 1 million tpy. Caraustar and Inland Paperboard and Packaging Inc. are currently studying the feasibility of converting Inland’s Newport, Ind., containerboard mill to produce lightweight gypsum wallboard facing paper.

 

New carton plant planned by Perkins

Perkins Papers Ltd. plans to build a 100,000 ft² folding carton plant in Lachute, Que., for C$12.6 million. The plant will replace the company’s current folding carton plant in Lachute. The construction and installation of new equipment should be completed by May, the company said. The plant converts boxboard into folding cartons for primarily fast food industry uses. Investissement-Quebec will contribute C$1 million to the project, and the city of Lachute allowed Perkins to buy the land at 20% below market value and to operate the plant without having to pay real estate taxes for 10 years.

 

UNCOATED FREE-SHEET

 

Fraser shuts 2 PMs, layoffs in Midwest

Fraser Papers Inc. in February temporarily took out machines at two of its paper mills in the Midwest, citing market oversupply in text and cover and printing paper grades. One machine, No. 1, was shut at the Park Falls, Wis., mill and one, No. 4, at the West Carrollton, Ohio, mill. The deinking operation at the Park Falls mill was also shut.

The Park Falls mill has total capacity of 137,000 tpy on three machines; the No. 1 machine’s capacity is 27,000 tpy and the deinking capacity is 70 tpd. The four machines at the West Carrollton mill have total capacity of 107,595 tpy; the No. 4 machine’s capacity is 22,518 tpy. The deinking operation there was not affected.

Fraser called the Feb. 8 shutdowns temporary, but does not have a target date for their restart. A spokesman said the action was taken in response to softening demand and declining printing paper prices. “In the face of difficult marketing conditions we had to decide whether to continue making fill paper and selling it on the spot market at times lower than our costs or adjust our capacity,” he said.

Seventy-eight workers at the two mills were laid off as a result of the actions—18 at West Carrollton and 60 at Park Falls.

 

CONTAINERBOARD

 

Rand-Whitney acquires box plant

Rand-Whitney Container Corp. acquired the former Union Camp Corp. corrugated box plant in Newtown, Conn., in December. The plant produces corrugated shipping containers, die-cut specialties, and displays. With the plant, Rand-Whitney plans to expand its business in Connecticut as well as sell into the metropolitan New York market, said John McNabb, Rand-Whitney’s vice president for finance. Before making the acquisition, Rand-Whitney was looking at expanding one of its plants in Massachusetts or building a new facility, McNabb said. Instead, the company opted for the about 30-year-old, 130,000 ft² Union Camp plant at a “reasonable” price, he said. Rand-Whitney now operates two corrugated plants and two sheet plants in the U.S. Northeast.

 

Menasha to buy corrugated plants

Menasha Corp. signed letters of intent to buy four corrugated sheet plants, including three in the U.S. South and one in Pennsylvania. The deal is expected to close in the first quarter, the company said in a release. The four sheet plants are Packaging Corp. of Carolina Inc. in Rockwell, N.C., near Charlotte; Tidewater Container Corp. of Suffolk, Va. near Norfolk; Packaging Services Inc. of Weyers Cave, Va.; and PSI Packaging Services Inc. of Connellsville, Pa. The Tidewater plant produces single-, double, and triple-wall corrugated containers, as well as government board. The Packaging Services Inc. plant in Weyers Cave produces corrugated containers and displays. Menasha has capacity to produce 275,000 tpy of corrugating medium, and operates 16 corrugated and related businesses in the U.S.

 

 

TISSUE

 

Kruger buys U.S. tissue mill

Kruger Inc. has acquired the troubled Shepherd Tissue Inc. mill in Memphis, Tenn., announced a name change for the business, and plans to expand production by up to 25%. The cost of the acquisition was not revealed, but Kruger said it was “substantially off” market price due to the financial problems at the mill. Shepherd Tissue bought the Memphis mill in late 1994 from Kimberly-Clark Corp. (K-C).

The acquisition of the 110,000 mtpy Shepherd Tissue business, which has been renamed Global Tissue LLC, increases Kruger’s total worldwide tissue capacity to 520,000 mtpy, according to the company. In North America, Kruger now has 362,000 mtpy of capacity among mills in British Columbia, Quebec, and the U.S., putting it ahead of nearest competitor Chesapeake Corp.

Kruger said it plans to invest $40 million over the next two years upgrading the mill including paper machine realignments, new converting equipment, and overall quality improvements. Although Kruger said there was plenty of room for expansion at the 40-acre site, there are no immediate plans for additional papermaking or converting capacity.

The mill currently houses four paper machines, but only three are operating. The fourth has reportedly been used for spare parts, but Kruger hopes to restart that machine within the next few months, according to Kruger chief financial officer George Bunze. He indicated that the company is not looking to expand further in the U.S., and would sell to U.S. markets from the Memphis mill.

The facility currently manufactures facial and bathroom tissue, towels and napkins for private label retail customers. Kruger says it plans to develop a commercial tissue business similar to that of its Scott Paper business in Canada.

The Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE), which represents 400 former Shepherd Tissue employees, has negotiated a 10-year labor agreement with Kruger. The union was not recognized by Shepherd Tissue until August 1998.

 

CAPITAL SPENDING

 

Cluster Rules cost Gilman $50 million

Gilman Paper Co. said it estimates that compliance with the U.S. Environmental Protection Agency’s Cluster Rule regulations at the company’s St. Mary’s, Ga., kraft pulp and paper mill complex will cost approximately $50 million over the next three to eight years. Gilman has contracted with Raytheon Engineers & Constructors Inc., Birmingham, Ala., to be their cluster rule engineering firm. There is no planned or required production downtime scheduled to meet compliance deadlines and the St. Marys mill currently meets all federal and state environmental requirements, said Gilman.

The St. Mary’s mill produces more than 400,000 tpy of bleached, unbleached and color kraft paper and paperboard grades on three fourdrinier paper machines. Current projects being implemented at the mill include installation of a new 50 tpd chlorine dioxide plant, evaluation of bleaching sequence changes, screen room modification and best management practices (BMP) compliance plan development. Future projects include evaluation of the condensate treatment system, the low-volume high-concentration (LVHC) streams, and the bleach plant.

Late last year, William H. Davis, chairman, president and CEO of Gilman Paper, announced the company was for sale. Bloomberg News reported the company has received expressions of interest from International Paper Co., Georgia-Pacific Corp., Champion International Corp. and Weyerhaeuser Co. as well as other unidentified companies. Gilman is being advised by NationsBank Securities.

 

ENERGY

 

Trigen to supply Gilman Paper mill

Trigen-BioPower has begun construction of a steam generation facility that will supply high-pressure steam to Gilman Paper Co.’s St. Mary’s, Ga., paper and paperboard mill under a 15-year contract. The facility, expected to be operational in first-quarter 2000, will burn primary paper sludge and waste wood from the facility.