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Harnischfeger auction of Beloit assets awaits final bankruptcy court approvalBankrupt Harnischfeger Industries Inc. announced the winning bids for the assets of its Beloit Corp. subsidiary. The sale of the assets of Beloit—one of the world’s three largest paper machine suppliers—is related to Harnischfeger’s June 7 filing for Chapter 11 bankruptcy reorganization. The winners were determined at an auction held Jan. 10-11 and are subject to approval by the bankruptcy court on Jan. 19. The winning bidders were: Groupe Laperriere & Verreault Inc. of Canada for the pulp and finishing divisions; Valmet Corp. of Finland for the paper aftermarket and roll covers division; Mitsubishi Heavy Industries Inc. of Japan for the paper technology division; RCI Acquisition Inc. for the woodyard division; and O&OC Acquisition Co. Inc. for OASIS. RCI and O&OC, both management buyout groups, were not among the initial bidders. Mitsubishi owns 20% of Beloit stock. In addition to the bankruptcy court approval, government agency approval is required in some cases, the company said. Harnischfeger’s chief restructuring officer Robert N. Dangremond said that the company will continue to divest or liquidate the Beloit assets that were not sold in the auction. He expects that process to be completed by spring.
Mexico’s Durango buys Gilman PaperCorporacion Durango, the holding company for Latin America’s largest paper producer Grupo Industrial Durango SA de CV (known as Gidusa) and newsprint producer Grupo Pipsamex (known as Pipsa), has acquired Gilman Paper Co., one of the largest privately owned paper companies in the U.S. The terms of the sale were not disclosed. Corporacion Durango said the purchase would increase its consolidated revenues to approximately $1.1 billion and raise its paper manufacturing and converting production volume by 32% to 2.2 million tons per year. Gilman’s paper operations generated 1998 revenues of $380 million, according to Durango. Miquel Rincon, Corporacion Durango’s chairman and CEO, said the decision to purchase Gilman Paper was in line with the group’s strategy to grow its operations in the North American market. “Gilman is a good company with unrealized potential,” Rincon said. “I believe it is a very good deal and a well-timed acquisition at a stage in the industry cycle when pulp and bleached board markets are sharply improving. Our top priority is to align costs and efficiency with industry standards.” The Gilman purchase will also strengthen the group’s regional integration and expand its product mix. Gilman mainly produces bleached paperboard for folding cartons, printing bristols and foodservice products, as well as kraft paper for bags, bleached and unbleached envelope papers, and other fine papers and specialty packaging papers. Included in the purchase of the Gilman operations is the 420,000 tpy pulp and paper mill located in St. Marys, Ga., and three converting facilities in Georgia, Tennessee and Pennsylvania. The converting facilities manufacture business forms, flexible packaging, and multiwall bags. The sale also includes a short-line railroad used to transport raw materials to the mill and deliver finished products to major connecting railroads. Approximately 2,100 employees are affected by the sale. *
ACX to sell Mich. paperboard millACX Technologies Inc., the parent of Graphic Packaging Corp, said it will seek a buyer for its recycled paperboard mill in Kalamazoo, Mich. The mill has capacity to produce about 340,000 tpy of lightweight coated recycled board (CRB) and houses the industry’s newest coated recycled board machine. ACX acquired the mill when it purchased the folding carton business of Fort James Corp. last year.ACX said it hopes to complete the sale of the Kalamazoo mill during the first quarter. The mill is not strategic to Graphic Packaging’s core folding carton business, said a spokesman, and any sale would include provisions for a long-term paperboard supply agreement to the folding carton plants. The sale of the mill would allow Graphic Packaging to focus its management and financial resources on its core converting operations. *
Re-Box proceeding with white top PMHarnischfeger auction of Beloit assets awaits final bankruptcy court approval Bankrupt Harnischfeger Industries Inc. announced the winning bids for the assets of its Beloit Corp. subsidiary. The sale of the assets of Beloit—one of the world’s three largest paper machine suppliers—is related to Harnischfeger’s June 7 filing for Chapter 11 bankruptcy reorganization. The winners were determined at an auction held Jan. 10-11 and are subject to approval by the bankruptcy court on Jan. 19. The winning bidders were: Groupe Laperriere & Verreault Inc. of Canada for the pulp and finishing divisions; Valmet Corp. of Finland for the paper aftermarket and roll covers division; Mitsubishi Heavy Industries Inc. of Japan for the paper technology division; RCI Acquisition Inc. for the woodyard division; and O&OC Acquisition Co. Inc. for OASIS. RCI and O&OC, both management buyout groups, were not among the initial bidders. Mitsubishi owns 20% of Beloit stock. In addition to the bankruptcy court approval, government agency approval is required in some cases, the company said. Harnischfeger’s chief restructuring officer Robert N. Dangremond said that the company will continue to divest or liquidate the Beloit assets that were not sold in the auction. He expects that process to be completed by spring. **
SALES AND EARNINGSLongview, Greif Bros. report earnings Longview Fibre Co. posted a profit of $20 million for the fiscal year ended Oct. 31, reversing a loss of $6.7 million in fiscal 1998. The company said “improved operating results in all segments of the business” helped the turnaround. Longview produces kraft paper and containerboard at a single pulp and paper mill located in Longview, Wash., and produces corrugated containers at 15 converting plants. For the fiscal fourth quarter, net income was $12 million compared with $1 million a year ago. Net sales for the fiscal fourth quarter and year were $227 million and $774 million, respectively, compared with $197 million and $753 million in 1998. Greif Bros. Corp. profits rose 37% in the fiscal year ended Oct. 31 to $51.3 million compared with $37.4 million in 1998, as a result of increased linerboard and corrugation medium prices in the second half of 1999. Fourth quarter profits rose 58.5% to $25.9 million from $16.3 million from the prior year’s quarter. Net sales for the full year were $819 million vs $814 million. The bottom line also benefited from the inclusion of Great Lakes Corrugated Corp. and Trend Pak Inc., which were acquired in April, and the full year inclusion of the fibre drum and plastic drum operations acquired from Sonoco Products Co. in 1998.
Fort James shuts machine at WaunaFort James Corp. said it will close its one uncoated groundwood machine at the Wauna mill in Clatskanie, Ore., mill to focus on its office papers business. The closure will take place by the end of February. The mill employs 70 people. The operation “strategically doesn’t make sense” said Joe Neil, president, Fort James communications papers business. “As a relatively small producer in a large, global marketplace, Fort James is unable to compete effectively in groundwood.” The business consists of a single machine that annually makes 140,000 tons of high-bright groundwood specialties for inserts. Fort James has less than 3% of the 5.7 million ton North American market. Neil said the uncoated free-sheet No. 4 machine at the Wauna mill, which has capacity to make 130,000 tpy, will not be affected. Business papers will also continue to be made at the Camas, Wash., mill.
Glatfelter to cut capacity at EcustaP.H. Glatfelter Co. said it would shut down production capacity at its Ecusta Div. in Pisgah Forest, N.C., during the first half of the year due to declining profitability of its tobacco papers business. The capacity reduction is the result of anticipated volume losses following the company’s announcement in September that it would raise tobacco paper prices on Jan. 1. The exact timing and amount of capacity reductions will depend upon how quickly customers establish new sources of supply and the extent to which they do so, Glatfelter said. The company could reduce the workforce at the Ecusta Div. by as much as 300 people, depending on how many paper machines are shut, but manufacturing capacity could be reduced by up to one-third.
Tembec, Kruger buy Marathon millTembec Inc. is notching one more mill on its acquisition belt in a joint venture with Kruger Inc. to buy the Fort James Corp. 180,000 mtpy northern bleached softwood kraft mill in Marathon, Ont. The C$100 million deal—the figure includes fixed assets and working capital—was expected to close at the end of January. The arrangement includes a three-year renewable agreement to supply a “significant portion” of the output to Fort James’ non-integrated operations, largely in European tissue, according to company statements. Both acquiring companies are based in Montreal, Que., and both operate in the Marathon region. Fort James said that Marathon, its only mill that is not integrated onsite, does not offer it a strategic benefit and that it also exposes it to increased earnings variability. Fort James said the transaction would sharpen the company’s focus on its core consumer products business.
Enron plan to buy Skeena collapsesTalks for Enron North America to buy Skeena Cellulose Inc. of British Columbia broke off Dec. 7, leaving the mill without a potential buyer. The potential deal fell through over “a number of issues between the parties that were not resolved,” said Don Zadravec, spokesman for Deputy Premier Dan Miller. The province owns 58% of Skeena, Toronto-Dominion Bank owns 22%, and employee groups own 20%. Both Enron and the province declined to comment specifically about the cause. However, an informed source said the current owners “didn’t find the deal agreeable. It probably wasn’t rich enough.” With the pulp market on the upswing again, he noted that “it is an entirely different world than it was six months ago.” Another sticking point was the refusal of members of Local 4 of the Pulp, Paper and Woodworkers of Canada (PPWC) to relinquish their shares in the company in return for restoration of their 10% wage decrease. Two other smaller employee groups had earlier agreed to relinquish their shares, as required by Enron for the sale to go through. Zadrevec said the province is attempting to resolve the shares issue with the PPWC. With the ending of British Columbia’s exclusivity agreement with Enron, Zadrevec said the province still intends to pursue its “long-term objective” of selling its interest in Skeena. On Dec. 9 he said no other potential buyers had yet come forward and that it was premature to discuss a price for the operation. Meanwhile, Skeena began starting up its B mill in December following a C$110 million modernization and was producing close to 50% of the line’s planned 120,000-140,000 mtpy capacity, with full capacity expected by the end of 1999. Total pulp mill capacity is 420,000 mtpy. * Mead Rumford mill selling market pulp Mead Pulp Sales began selling hardwood market pulp from the Mead Paper Div.’s Rumford, Maine, mill on Jan. 4. The mill has a market pulp capacity of 99,000 tpy, said Bob Richards, Mead Pulp Sales director of fiber resources. The decision to sell market pulp is related to Mead’s decision to shut four small uncoated paper machines there. The company said that in order to maximize output and efficiency, it would convert one of the machines to a pulp dryer, resulting in a surplus of pulp. Mead said it has invested $15 million to retool the process to produce market hardwood kraft and to improve quality. Mead will first sell the pulp in roll form, then switch to bales after a late second-quarter pulp machine shut for installation of sheeting and baling equipment.
Buyer found for Tree-Free tissue millAmerican Paper Mills of Maine said it has signed an agreement to purchase the idled Tree-Free Fiber Co. mill in Augusta, Maine. The company, a subsidiary of Super American Tissue (parent of American Tissue), said it expects to close the deal by early January. The purchase price was not disclosed. The Tree-Free tissue mill, formerly Statler Tissue Corp., closed Nov. 21, 1997, and was placed into receivership three weeks later. At the time, the company’s total secured and unsecured debt was estimated at more than $11 million. An American Tissue official would not elaborate on whether it will assume any of the debt. The official said the company planned to restart the mill two to four weeks after the deal closed but no details were available on how much will be invested. The Tree-Free facility houses two paper machines and will produce 100% recycled tissue. * K-C begins recycled pulp installation Kimberly-Clark Corp. (K-C) is preparing to begin construction of a $17 million recycled pulp facility at its Mobile, Ala., tissue mill. Startup of the pulp mill, which will process old corrugated containers (OCC), is expected in fall 2000, a K-C spokesman said. The mill’s expected production capacity was not available. The pulp will be used in the manufacture of K-C’s away-from-home tissue line, the spokesman said. The furnish also will include recycled, eucalyptus, northern hardwood kraft, and northern softwood kraft pulp sourced internally and on the market, the spokesperson said. The company said it has received $2 million in tax abatements for the project from the Mobile Industrial Development Board. The company is also considering building a second recycled pulp mill at the facility but no final decision has been made.
Groupe Cedrico pursuing Abitibi millIn an effort to save the Chandler, Que., newsprint mill from permanent closure, a Quebec businessman said he wants to acquire the idled Abitibi-Consolidated Inc. mill and convert production to lightweight coated (LWC) paper. Gilles Berube, president of Price, Que.-based Groupe Cedrico, presented his plan to Chandler residents in December, according to an official with the union representing mill workers. He had been working with Abitibi to create a joint venture to run the mill before it was permanently shut. The company owns six sawmills and an engineered wood products facility. According to Elmo Whittom, a vice president of the Communications, Energy and Paperworkers Union of Canada (CEP), Berube would build a sawmill and convert the No. 1 newsprint machine to LWC, creating 275 jobs. That phase of the project would be completed in 2002, Whittom said. The plan also calls for eventually restarting the No. 2 paper machine to produce LWC, creating 50 jobs, he said. As joint venture partners, Abitibi and Cedrico planned to build a $30 million sawmill that would feed chips to a new, $70 million thermomechanical pulp (TMP) line aimed at lowering the mill’s cost of production. SGF Rexfor said it may be interested in becoming a minority stakeholder in Chandler if the deal is approved. The company already is a joint venture partner with Cedrico in a panel mill in Mont-Laurier, Que., northwest of Montreal.
December marred by four fires• Irving Forest Services. A Dec. 17 fire destroyed an Irving Forest Services warehouse in Saint John, N.B., wiping out thousands of tons of kraft pulp and pulping chemicals before being extinguished Dec. 19, the company said. The cause of the fire is under investigation. Irving Forest Services is a subsidiary of J.D. Irving Ltd. The blaze destroyed 4,700 mtons of kraft pulp and 326,000 mtons of sodium hydrosulfite, a chemical used in pulp bleaching, according to a company spokeswoman. One-quarter of the facility is used as a transfer and distribution center for the chemical, which is manufactured and marketed by BENCO of Charlotte, N.C. A damages estimate was not available from the company, but based on current transaction prices for northern bleached softwood kraft (NBSK), the pulp losses are estimated at $2.9 million. BENCO calculated its losses at $450,000. • Boise Cascade Corp. A radical environmentalist group has claimed responsibility for a fire that destroyed a Monmouth, Ore., office of Boise Cascade Corp. Dec. 25. Boise spokesman Doug Bartels said about $1 million in damages was caused to the building which housed the Oregon timberlands operations. A group called the Earth Liberation Front issued releases to news organizations saying it caused the fire. The FBI and Oregon State Police are investigating the blaze as an arson. About 25 people worked in the building. There were no injuries. • American Tissue Corp. A fire shut down American Tissue Corp.’s 85,000 tpy recycled corrugating medium mill in Harriman, Tenn., on Dec. 16. The mill started back up on Dec. 30. A company executive said the fire started in a roof over the dryer end of the Black-Clawson Fourdrinier machine. The roof was replaced. American Tissue also announced that work has started on installing a new recovered paper handling system at the mill, the executive said. • Port Townsend Paper Corp. A fire in two metal buildings in December at the Port Townsend Paper Corp. mill in Washington damaged about 400 electric motors, a forklift, a 14-ton crane, and a tractor, the company said. A damage estimate was not available. The fire did not affect production at the 250,000 tpy pulp and paper mill. The storage buildings are separated from the pulp and paper mill complex. Port Townsend Paper makes about 166,000 tpy of lightweight kraft linerboard, and kraft bag, wrapping, gumming, and wet-strength papers; and about 83,000 tpy of unbleached softwood kraft market pulp. The fire on Dec. 5 sparked from a lit pilot light that frayed a heater cord that was connected to a block on a forklift. No one was hurt in the late-night fire.
Concerns over proposed rail mergerBurlington Northern Santa Fe Corp. (BNSF) and the Canadian National Railway Co. (CN) on Dec. 21 announced a merger creating North America's largest railroad. The plan, however, is raising concerns among some shippers, including pulp, paper, and wood product manufacturers, who fear the combined railway may use its dominant position to raise prices and cut “already shaky” service. Paper and wood products currently account for only 5% of BNSF tonnage yet the company handles about 18% of the industry's total U.S. rail shipments. Under the terms of the deal, BN would own about two-thirds of the new company, to be known as North American Railways. Today, BNSF serves paper and wood product mills primarily in East Texas, Alabama, and the Lake States. CN, with its affiliates Illinois Central and Kansas City Southern Lines, serves manufacturers across all of Canada as well as in Louisiana, Mississippi, Alabama, and the Lake States. “I am surprised by the timing of this proposal,” Surface Transportation Board (STB) chairwoman Linda Morgan said in a statement. “Railroads, together with their customers and employees, have not yet fully adjusted to recent mergers, and this proposal may represent the beginning of another round of major rail mergers. The board will have to review carefully all of the ramifications of any such application that may be filed.” The prior mergers of Union Pacific and Southern Pacific Rail Corp., in 1996, and the division of Conrail Inc. by Norfolk Southern Corp. and CSX this year led to major bottlenecks, according to shippers. In Canada, the deal will be reviewed by the Competition Bureau that will look only at the impact on competition in Canada, not on a North American scale. While CN has significant U.S. operations, BNSF has only a minor presence in Canada. The combined company would have 50,000 miles of track stretching from Nova Scotia to Los Angeles and the Gulf of Mexico, connecting every state west of the Mississippi and every major city across Canada. BN would jump ahead of Union Pacific as the largest U.S. railroad.
Pacifica slates upgrade at B.C. millPacifica Papers Inc. has contracted with Environmental Elements Corp. to install new pollution control equipment on the recovery boiler at its newsprint and softwood kraft market pulp mill in Powell River, B.C. The project is designed to keep the mill ahead of future recovery boiler particulate emission reduction rules. Pacifica recently projected a need for C$5 million in pollution control upgrades to solve total reduced sulfur (TRS) emissions problems. The recovery boiler accounts for 20% of the TRS output.Powell River’s power plant includes two boilers: one gas-fired and the other hogged fuel-fired (onto which the precipitator will be installed). The mill operates on purchased electricity, and generates its own by use of steam turbine and hydro. Construction will begin in April 2000 with targeted completion in September. Y2K COMPLIANCE Industry spent millions on Y2K compliance In the race to the new millennium, U.S. paper companies invested considerable resources to avoid any problems associated with the so-called Y2K (year 2000) computer bug. Hundreds of millions of dollars were spent to ensure that older computer systems didn’t mistake 2000 for 1900 and crash, causing massive shutdowns of pulp and paper mills across the country. Raytheon Engineering & Constructors Inc. guided 17 pulp and paper companies through the Y2K compliance process, according to Mark Cubine, director of manufacturing and services practice. He said most of the companies had completed their preparation by the end of summer. Most of the larger companies had a Y2K program in place since at least 1996. He said the cost of compliance for a 1,000-tpd mill ranged from $250,000 to $1 million, depending on years of operation and the age and complexity of the computer process control systems. The majority of these costs are associated with replacing or upgrading computer software and systems at the production site. The remaining costs are associated with the distribution and central business systems. Appleton Papers Inc., a mid-size producer of printing and specialty papers, said it converted 5.5 million lines of program code to year 2000 compliance. The Wisconsin-based company estimated it spent about $0.50 per line of code in the conversion effort, about one-half the projected cost of $1.10-$1.65 per line of code for many companies. International Paper Co. (IP), the world’s largest paper and forestry company, began its Y2K compliance program in February of 1996 with one employee. The program grew to 40 people involving a worldwide effort. IP estimates it spent approximately $90 million on its Y2K efforts. The company said it completed its compliance program for the majority of its corporate information systems, financial and administrative systems and production control systems by June 30, 1999. Facilities acquired from the merger with Union Camp Corp. in April completed their compliance by a Sept. 30 target date.
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