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IP-Champion merger clears govt. review International Paper Co.’s $9.6 billion acquisition of Champion International Corp., which includes a $7.3 billion cash and stock offer and assumption of $2.3 billion in debt, has been given antitrust clearance by the U.S. Dept. of Justice, paving the way for the creation of a global leader in printing/writing papers, market pulp, and other key forest products. Antitrust reviews are still pending in Canada and Brazil but are not expected to delay completion of the transaction, which IP said will happen in early summer. The deal creates a massive forest products titan with estimated global sales of almost $30 billion and capacity for up to 18 million tpy of paper, paperboard, and market pulp, based on 1999 data. The key Champion mill in the acquisition is the Courtland, Ala., coated and uncoated free-sheet facility—one of the largest paper mills in the U.S. IP already operates two large uncoated free-sheet (UCFS) mills in Alabama. Beside a key leadership in UCFS, the Champion deal gives IP "scale" in coated groundwood papers, with total capacity of about 1.2 million tpy in North America. The new IP’s chief paper/board products worldwide will be UCFS, linerboard, bleached paperboard, coated groundwood, packaging/industrial, and coated free-sheet.
Capital spending to rise 13% in 2000 Spending estimates by 48 North American-based pulp and paper companies for fiscal 2000 show a projected increase in capital expenditures of 12.6% in 2000 compared to actual fiscal 1999 spending. Combined spending for 35 U.S. and 13 Canadian companies is estimated to increase by $1.05 billion to a total of $9.38 billion in fiscal 2000 following four years of declines.
Total spending in fiscal 1999 declined 6.1% or by $546 million from the year earlier to $8.32 billion. This is in contrast to the projected spending increase of 8.1% or $724 million that was tabulated in last year’s survey. As has happened in the past several years, numerous companies held back on expenditures, resulting in actual spending that is significantly less than originally projected. Leading the way, Weyerhaeuser Co. spent $219 million less in 1999 than it had originally expected. Spending by 13 Canadian-based paper and forest products companies is expected to increase a modest 5.1% in 2000 to total C$2.15 billion, a gain of C$105 million from 1999. This projected increase would mark the second consecutive increase in spending following three years of sharp declines. Spending in 1999 was up 14.3% to just over C$2.0 billion, an increase of over C$250 million.
Canada’s 1Q earnings show strong growth The majority of Canada’s paper and forestry companies recorded impressive earnings in the first quarter, helped by improving markets and pricing for the industry’s key businesses of market pulp and printing papers. Sales volume for 17 companies increased 21% to C$7.2 billion from C$5.6 billion. Net earnings tripled to C$407 million from C$100 million in the same period a year ago. The overall net profit margin improved to 5.6% from 1.7%. These gains were partially offset by the rising cost of virgin and recycled fiber and lower average selling prices for newsprint. Canada’s pricing for newsprint was approximately 14% lower than in the first quarter of 1999—hurting large newsprint players like Abitibi-Consolidated Inc. and Donohue Inc. The Canadian industry’s improvement in net earnings compared to the first three months of last year was essentially due to increased shipments of printing paper and lumber.
Canadian capacity to grow 1.0% annually Partial data of the 2000 pulp and paper capacity survey for Canada shows that total industry capacity growth is expected to slow during the 2000-2002 period, adding approximately one million mtons of paper, paperboard, and market pulp capacity, according to the Pulp and Paper Products Council. The annual growth rate over the survey period averages 1.0%, less than half of the 2.3% annual growth rate recorded during 1989-1999. Capacity to manufacture paper and paperboard is forecast to grow at an annual rate of 1.2% through 2002, well below the average annual rate of 2.0% recorded from 1989-1999. Last year’s survey projected annual capacity growth slowing to 0.6% in the 1998-2001 period. The biggest growth segment in the latest survey continues to be printing/ writing papers, which is forecast to grow at an annual rate of 3.8%, adding 728,000 mtons of capacity. However, this is well below the average annual growth rate of 5.3% recorded during the past decade. Newsprint capacity is forecast to decrease by 303,000 mtons of capacity through 2002, for a negative annual growth rate of 1.0%. Total paperboard capacity, which includes containerboard and boxboard, is slated to grow by 245,000 mtons to total over 4.5 million mtons, for an average annual growth rate of 1.9%. Containerboard capacity growth will account for 109,000 mtons of total board growth, growing at an annual rate of 1.1%, well below the ten-year average growth rate of 4.5%.
Champion completes Sartell upgrade Champion International Corp. announced it has completed the upgrade to the No. 3 coated groundwood paper machine at its Sartell, Minn., mill. The $40-$46 million project was aimed at improving the printability and sheet aesthetics of the company’s No. 5 coated groundwood papers for offset and rotogravure printing. The machine upgrades will allow for enhanced machine speeds and efficiencies and quality on ultra-lightweight and higher value-added grades, increased sheet uniformity, superior formation, expanded weight range production, and improved printability.
Perkins launches new PM in N.C. Perkins Papers Ltd., a subsidiary of Cascades Ltd., announced the startup of its new 30,000 tpy Voith Crescent former tissue paper machine at its recycled paper mill in Rockingham, N.C. The new machine is part of a $25 million project at the mill, which also includes a capacity increase of the deinking unit and construction of an 85,000 ft2 warehouse. The Rockingham mill currently produces approximately 50,000 tpy of tissue and toweling. The new machine will increase company-wide production by 13% to 262,000 tpy. The improvement program is scheduled for completion in early summer. Kruger shuts Memphis tissue mill Kruger Inc. of Montreal said it shut its 110,000 mtpy capacity Global Tissue LLC paper mill in Memphis, Tenn., after a major customer terminated its contract. A mill official said the lack of warning from the customer prevented them from finding a buyer for that portion of the mill’s output, and forced them to shut the operation. Secured lenders have taken possession of the mill, which went down May 10, the official said. He said the lenders plan to seek a buyer for the mill. Although the mill official would not identify the customer, the Memphis Commercial Appeal newspaper reported that several employees identified it as Dallas-based Kimberly-Clark Corp. (K-C). Oconto Falls tissue PM slated for July A second tissue paper machine planned for startup in May at PCDI Oconto Falls Tissue Inc. in Oconto Falls, Wis., was expected to begin production July 29, a company spokesman said. Production on the new Voith Sulzer Crescent former machine was originally scheduled to begin last October, but state bonds to finance the project were not finalized until November. The new machine will have an output capacity of 80 tpd recycled tissue, and a trim width of 108 in.
Champion's machine rebuild will improve No.5 coated groundwood quality.
PACE calls for globalizing union at Jefferson-Smurfit The Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE) called for the establishment of a world council of unions representing workers at Jefferson-Smurfit PLC, the parent company of Smurfit-Stone Container Corp. at a recent meeting in Jacksonville, Fla. Union representatives from five countries attended the meeting along with PACE local union representatives from over 60 Smurfit-Stone plants in the U.S.
Fort James to dredge Fox River The Wisconsin Dept. of Natural Resources (DNR), the U.S. Environmental Protection Agency (EPA), and Fort James Corp. have agreed to complete a dredging project designed to remove sediments containing polychlorinated biphenyls (PCBs) from a portion of the Fox River. Under the agreement, Fort James will remove up to 50,000 cubic yards of sediment containing PCBs from the bottom of the Fox River at a site adjacent to the company’s tissue mill on Broadway Ave. in Green Bay, Wis. Fort James contractors will use hydraulic dredges to remove sediment and water from the river. The sediment will be separated from the water and sent to a landfill owned by Fort James, where it will be permanently buried in a secure cell. The separated water will be treated and sent back to the river. The project is expected to begin in late summer and conclude in November.
Alliance’s new PM nears startup Alliance Forest Products Inc. said its new 152,000 mtpy paper machine at its Donnacona, Que., mill will use the latest generation on-line supercalendering process. The C$275 million project is expected to be completed in September. Alliance said the machine will produce top-end supercalendered (SC-A) paper and have the capability to manufacture large rolls, up to 145-in., for the latest rotogravure presses. Two older paper machines at the mill, No. 1 and No. 2, producing a combined 90,000 mtpy of newsprint and uncoated groundwood specialties, will be permanently shut down when the new No. 4 starts up.
Tembec expands BCTMP capacity Tembec Inc. is expanding high-yield market pulp capacity at its Matane, Que., mill in a C$5.5 million project. By modifying woodchip intake for the mill’s two pulp lines, capacity for bleached chemithermomechanical pulp (BCTMP) will increase 24,000 mtpy or by about 13% from 186,000 mtpy to 210,000 mtpy. The company’s total BCTMP capacity is currently 500,000 mtpy. While noting the current robust conditions in the market pulp business, the company said the project is to achieve efficiency and to grow in the BCTMP business. Increased fiber demand at the mostly-softwood Matane mill will be supplied by expanding regional woodchip supply and by using a mix of timber species. It is the company’s first investment in Matane since acquiring the mill late last year from Donohue Inc. and SGF Rexfor Inc.
Appleton to expand thermal papers Appleton Papers Inc. plans to increase its thermal paper production capacity at the Appleton, Wis., converting plant by more than 50% during the next 18 months through a series of equipment upgrades and expansions. The company did not disclose the cash value of the investment for "competitive reasons," but said it was significant and amounted to "$10s of millions." The capital expansion is scheduled for completion in the second half of 2001. The company will also install an additional coating station on an existing thermal coater installed in 1994 to extend its production capabilities. Proposals to reopen A-C paper mill Abitibi Consolidated Inc. confirmed it has received at least three new proposals for its idled Gaspesia Paper mill at Chandler, Que. The company would not identify the interested parties, but knowledgeable industry sources in Canada said they are Gaspesia Paper Inc., SNC Lavalin Group Inc., and Les Fonds de Solidarite. All three proposals call for converting the mill to coated paper production.
Oregon City mill now Blue Heron Paper The KPS Special Situations Fund, L.P. announced it has completed the purchase of Smurfit Stone Container Corp.’s Oregon City, Ore., newsprint mill. The new company is named Blue Heron Paper Co., and will produce newsprint, groundwood specialties, and recycled-content bag papers on three paper machines. The capacity of the mill is in excess of 200,000 mtpy, according to the new company. Under a renegotiated labor plan, KPS Fund, as the controlling investor, owns 60% of Blue Heron Paper, and employees of Blue Heron own 35% through an employee stock ownership plan. Kruger completes PM rebuild Kruger Inc. completed a C$22 million modernization of the No. 2 newsprint machine at its Bromptonville, Que., mill. The company recently restarted the machine following a 21-day shutdown. Major renovations on the machine were aimed at improving quality and resulted in a capacity increase of 18,000 mtpy. The project is part of a C$51 million investment, announced Sept. 9, that would improve newsprint quality, reduce production costs, and double the capacity of the existing deinking facility.
Tembec approves TMP line in Manitoba Tembec Inc. said its board of directors has approved plans to install a new thermomechanical pulp (TMP) line at its Pine Falls, Man., newsprint mill. The C$115 million investment is expected to reduce manufacturing costs at the 180,000 mtpy Pine Falls Paper Co. plant by more than C$100/mton. The new TMP line should be fully operational by October 2001. Grande Alberta LWC mill years away On the drawing boards for at least eight years, Grande Alberta Paper Ltd.’s proposed C$900 million lightweight coated (LWC) paper mill in northwestern Alberta is still at least two years away from becoming a reality, according to a corporate relations officer for the company. Mill officials met May 1 with the government to ask for an extension to complete the environmental assessment process. According to the company spokeswoman, it will take approximately one year to finish the environmental assessment report, followed by six months of permitting, then construction. Plans are for a paper machine with capacity to produce between 350,000 to 400,000 tpy of LWC groundwood publication papers. Pulp furnish will come from a chemithermomechanical pulp (CTMP) mill, and will consist of integrated pulp, purchased bleached kraft pulp, and a mixture of recycled paper trim and waste from the paper mill itself.
Westvaco to acquire packager IMPAC Westvaco Corp. said it has agreed to acquire specialty packaging and printing company IMPAC Group Inc. in a deal valued at $500 million. IMPAC, which is based in Melrose Park, Ill., is owned by its employees and by Heritage Partners, a private equity group in Boston, Mass. A final purchase agreement is expected to be completed by summer. The acquisition gives Westvaco the ability to expand its specialty packaging business, according to company officials. IMPAC is a leading supplier to the North American and European music and multimedia entertainment markets and the North American cosmetics and personal care markets. For cosmetics and personal care markets, IMPAC designs and produces paperboard, plastic and windowed folding cartons, rigid paperboard set-up boxes and litho-laminated fluted packaging.
Riaupulp mill expan-sion on schedule Asia Pacific Resources Intl. Holdings (APRIL) announced that the expansion of its No. 2 pulp line at its Riaupulp mill in Kerinci, Indonesia, remains on target for completion in first quarter 2001. This first phase of expansion will boost the mill’s bleached hardwood kraft pulp capacity by 450,000 mtpy to reach 1.3 million mtons. Total project cost is $520 million, of which $170 million had been spent through December 1997. An additional $92 million has been invested when the expansion was resumed last September.
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| Pulp & Paper Magazine, July 2000 | CONTENTS | ||
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