Newsprint mergers continue with Bowater set for Alliance buy

Newsprint giant Bowater Inc. announced plans to acquire Alliance Forest Products Inc. in a proposed deal valued at $770 million (C$1.2 billion), including $274 million in assumed debt. If approved by shareholders, Bowater's production of newsprint, coated, and specialty papers would increase to 6.28 million mtpy. The combination of the larger Bowater and smaller Alliance turns out a company with annual sales of an estimated $3.2 billion and debt of an estimated $2.2 billion (based on year end 2000 figures). In the last three years, it would be Bowater's fourth major or key acquisition in newsprint. Along with Alliance's mill in Coosa Pines, Ala., which will convert to producing 100% recycled content newsprint in December, Bowater would have a team of three solid, freight-advantage mills in the U.S. South for serving the entire South and Southwest, from Virginia to Texas, and a strong presence in eastern Canada with six mills for serving customers in Canada, the U.S. Northeast, and the U.S. Midwest. On the West Coast, Bowater also runs the Ponderay newsprint mill in Usk, Wash. With the conversion of Bowater's Catawba, S.C., mill newsprint capacity to coated paper, a Bowater official said that the company's overall newsprint output will remain about level, factoring in Alliance's tonnage. Currently, Alliance is in the midst of expanding recycled newsprint production at the Coosa Pines mill from 40% to 100%—a project Bowater intends to complete. Capital expenditures planned amount to $280 million in 2001 and $160 million in 2002. The Coosa Pines project includes an increase in deinked pulp production to 1,150 mtons/day and the closure of its hardwood kraft and mechanical pulp mills. A component of the project that would speed up total production from 393,000 mtons to 450,000 mtons, however, is under review by Bowater. Bowater is the second largest newsprint producer in North America and the third largest producer of market pulp.

IP, G-P, Mead post first-quarter losses

International Paper Co., Georgia-Pacific Group, and Mead Corp. reported first-quarter losses, following earlier warnings that earnings would be hurt by weak demand for paper, packaging, and wood products, slumping market prices, high energy costs, and one-time charges for plant closings. The strong U.S. dollar was also a major obstacle for U.S. paper companies relative to foreign competitors, particularly European producers of fine printing papers. International Paper (IP) said that including special charges its net loss was $44 million compared with a net profit of $378 million in the first quarter a year ago, which included one-time gains of $134 million from asset sales. IP said year-to-year comparisons were difficult because first-quarter 2000 figures do not include Champion International Corp., which was acquired in June of last year. Nonetheless, the continuation of a dramatic slowdown of orders combined with a strong U.S. dollar "hammered" domestic profitability and export competitiveness during the first quarter, said the company. Also, energy costs were about $50 million higher than in the fourth quarter. Georgia-Pacific (G-P) lost $137 million during the first quarter, although the group's consumer tissue products segment had good operating results bolstered by the Fort James Corp. acquisition. Not counting one-time charges, the company lost $84 million. A year ago, first quarter net income was $194 million. Mead reported an operating loss of $36.6 million compared with earnings of $23.2 million in the 2000 first quarter. The net loss including a charge for accounting changes, was $47 million.

Uniforet files for bankruptcy protection

Uniforet Inc. filed for court protection as it sorted out debts and other credit obligations. Financial sources said that the St. Leonard, Que., company's problems run deeper than weak pulp and lumber markets. Before filing for court protection of its assets, Uniforet had missed an Apr. 15 debt payment of $3.4 million owed on 11.125% senior notes due in 2006, the firm announced. The debt was from an earlier $125 million high-yield bond offering Uniforet had issued in 1996 to finance prior debt and a $33 million debottlenecking project at Port-Cartier. If the company had a better credit rating, it could have raised capital—or pushed back its debt payments several years—by again trading high-yield bonds. Unable to raise money on the bonds market and lacking sufficient buyers to move its pulp at profitable margins, Uniforet in February decided to shutter its remaining pulp mill at least until June.

International Paper to close Moss Point

International Paper Co. (IP) said it will indefinitely close its aging Moss Point, Miss., bleached paperboard mill by the end of June due to high costs and the need to align production with lower demand for the mill's products. The 89-year-old mill was temporarily idled two times in the first quarter related to market conditions. Moss Point has one paper machine that has production capacity of about 500 tpd, or nearly 200,000 tpy, of bleached packaging board and printing bristols. IP produces bleached board at five other mills in the U.S., including Augusta, Ga., and Riegelwood, N.C. The mill, which employs 375 people, was constructed in 1912 and acquired by IP in 1928.

Temple-Inland buys Chesapeake plants

Temple-Inland Inc. has acquired four corrugated and six sheet plants for $120 million from Chesapeake Corp. and agreed to purchase Elgin Corrugated Box Co. in Illinois. The Elgin deal came two weeks after the Chesapeake deal. The Chesapeake plants—operated under the subsidiaries Chesapeake Packaging Co. and Capitol Packaging Corp.—are in seven states (Colorado, Indiana, Kentucky, New York, North Carolina, Ohio, and Pennsylvania) and provide Inland Paperboard with its first plants in New York in Binghamton, Buffalo, Sciota, and Utica. In addition, the plants increase Inland's estimated integration level to at least 90% this year—the second highest integration level among North American producers. In 1999, the company made an estimated 33.6 billion ft2, 8.3% of U.S. corrugated output.

With the Chesapeake and Elgin plants, Inland would run 60 plants, including 52 corrugated and 8 specialty/converting operations.

Gulf States, G-P end SBS joint venture

Privately-held Gulf States Paper Corp. and Georgia-Pacific Corp. (G-P) will end their joint venture to market and sell their solid bleached sulfate (SBS) paperboard. No additional details are available, but a spokesman for G-P said a final determination will be announced following further discussions and a definitive termination date. The 1997 agreement includes SBS paperboard produced at G-P's Crossett, Ark., mill and Gulf State's Demop-olis, Ala., mill. No assets were exchanged in the joint venture, but Gulf States was responsible for overall sales, marketing, and customer service for all paperboard produced at the two mills. The aggregate production of both mills is sold under Gulf States established CartonMate paperboard trademark. The Crosset mill has 213,000 tpy of bleached board capacity, and the Demopolis mill has 265,000 tpy of bleached board capacity. The Crossett mill also produces 224,000 tpy of uncoated free-sheet and 257,000 tpy of tissue products. G-P produces 120,000 tpy of bleached board at a second mill in Brunswick, Ga., that was not part of the joint venture.

Inland Empire starts new newsprint PM

Inland Empire Paper Co. has begun production on a new 205,000 mtpy newsprint and groundwood specialty papers machine at its Millwood, Wash., mill. The machine, partly supplied by Voith Sulzer and partly supplied by Beloit, stands as the first new newsprint machine in the U.S. and Canada in almost 10 years. The last new North American newsprint machine came on line in September 1991 when North Pacific Paper Co. started up a 220,000 mtpy machine in Longview, Wash. Originally, all parts for Inland's machine were to be supplied by Beloit Corp. However, Beloit declared bankruptcy last year, causing some concern that the machine's start-up may be delayed. The new machine will replace the mill's existing 82,000 mtpy machine, which will be mothballed. Fiber furnish for the machine will be approximately 33% deinked pulp, 50% mechanical pulp, and 17% purchased market pulp.

Madison idles SC machine for upgrade

Madison Paper Industries idled paper machine No. 3 at its supercalendered groundwood paper mill in Madison, Maine, as part of an upgrade project that was nearly complete by the end of April. The machine was down for approximately six weeks. About 50,000 tons of SC-A grade paper were removed from the market as a result of the downtime. The machine rebuild is part of Madison's plan to upgrade the facility in order to produce high-quality SC papers. The $52 million investment in the No. 3 machine includes a complete rebuild of the wet-end. For the past three years, Madison has been investing in the facility, including installing a new twister/wrapper and a total rebuild of the calender rolls. The company said the No. 3 rebuild upgraded the paper machine to produce high-quality SC paper. The No. 3 machine has capacity to produce 190,000 mtpy of SC-A.

G-P plans to expand Port Hudson mill

Georgia-Pacific Corp. plans on spending $80.5 million for paper-sheeting equipment and an expansion at the 573,000 tpy Port Hudson, La., mill. The sheeter is planned to help the mill serve increased demand for cut-size 8-in. by 11-in. paper, the company said in a Baton Rouge, La., Advocate News story.

Crown Vantage to sell St. Francisville

Crown Vantage Inc. is selling its 425,000 tpy free-sheet specialties and coated groundwood mill in St. Francisville, La., to a newly-formed group of Crown Vantage bank lenders called CV Paper LLC. The proposed agreement requires CV Paper to pay $21 million to fund the bankruptcy plan for Crown Vantage as well as $85 million to cover loan facilities. If done, that would eliminate $147 million in loans due. The St. Francisville mill has capacity to produce 115,000 tpy of free-sheet specialties and 310,000 tpy of coated groundwood papers. The mill is located north of Baton Rouge on a waterway near the Louisiana-Mississippi border.

Canadian pulp mills take market downtime

Several major market pulp producers said recently they plan to slow production to balance order books and perform annual maintenance work. In total, North American producers plan to take an estimated 423,200 mtons of market- and maintenance-related downtime in the second quarter. The estimated downtime represents about 10% of production, based on second-quarter 2000 output. Tembec Inc. that it would curtail about 55,000 mtons of market pulp during the second quarter. Tembec will lose about 10% of its quarterly output. The company declined to say which of Tembec's five North American pulp mills planned to take downtime but indicated the curtailments would combine maintenance- and market-related outages. Bowater Inc. said it expects to curtail a total of 30,000 mtons of pulp from its supplies during the second quarter. The Greenville, S.C., firm said that systemwide it had curtailed 45,000 mtons of market pulp in the first quarter of 2001. Parsons & Whittemore meanwhile closed its 260,000 mtpy St. Anne mill in Nackawic, N.B., in April on a 10-day maintenance shut. St. Anne will drop 7,444 mtons of bleached hardwood kraft (NBHK) from its supplies or about 11.5% of the mill's second-quarter capacity. Valois Vision Marketing recently reported that Parsons & Whittemore's bleached hardwood (SBHK) pulp mill in Perdue Hill, Ala., would take a total of 27,000 mtons of downtime or over 21% of its second-quarter capacity.

Smurfit-Stone shuts five more machines

Due to high energy costs and weak containerboard demand, Smurfit-Stone Container Corp. (SSCC) has indefinitely shut five machines that would eliminate an estimated 2,213 tpd of capacity. The company said the two smallest machines at the Missoula, Mont., kraft linerboard mill as well as the No. 1 corrugating medium machine at the Hodge, La., mill and the lone machine at the Carthage, Ind., corrugating medium mill were indefinitely shut at the beginning of April. The company also shut the No. 2 linerboard paper machine at the Fernandina Beach, Fla., mill because of high energy costs and weak market conditions. The papermachine can make 573 tpd. SSCC has indefinitely or permanently shut 15 of the 19 containerboard machines shut since late-1998 in the U.S.

In total, the company plans to eliminate 55% of the capacity at the 792,000 tpy Missoula, Mont., mill. Both the Nos. 1 and 2 machines are shut. One was shut on Mar. 1, and the other was shut on Apr. 1. The 1,000 tpy No. 3 machine continues operating. The No. 1 machine at Hodge makes medium and has been down since March. In the first quarter, North American producers eliminated more than one million tons of capacity, primarily through market-related shuts. The producers either shut machines or slowed down machines in the effort to align supply with demand and hold up their containerboard and box prices.

G-P to indefinitely shut Toledo PM

Georgia-Pacific Corp. (G-P) announced to customers and employees in April that the company planned to indefinitely shut down its 240,000 tpy corrugating medium machine at the Toledo, Ore., mill. G-P idled the machine at the end of April. The machine was one of three at the containerboard mill. The mill is the highest-cost containerboard facility in the G-P system. The company has slowed machines at the mill, but the slowback strategy wasn't enough in the effort to align the mill's supply with demand. The machine at Toledo was the 19th one in the U.S. containerboard sector to be indefinitely/permanently shut since the end of 1998.

American Tissue shuts Tennessee mill

American Tissue Mills (ATC) has indefinitely shut its 120 tpd recycled corrugating medium mill in Harriman, Tenn., mainly due to weak market conditions, the company said. A fire at the one-machine mill recently damaged the paper machine. The machine is back up to speed but running inefficiently, and when coupled with the soft pricing and demand for medium, ATC decided on the shut. The company hopes to restart the machine in the second half of this year.

Kimberly-Clark shut Mobile tissue PM

Citing high energy costs, Kimberly-Clark Corp. (K-C) plans to shut down one of five paper machines at its 245,000 tpy Mobile, Ala., tissue mill by the end of June. With the shut, the company plans to re-duce production by 20% at the mill. A spokesman declined to say which mach-ine would be closed. K-C has shifted production from the Mobile mill to some of its lower-cost facilities and outside sources. Along with the production cutback, 115 employees will also be laid off. K-C is working with its unions to use early retirement packages where possible.

A company spokesman said the mill would not return to full production capacity until Mobile Energy Services Co. (MESC) lowers energy prices or the facility can offset the energy costs of running all five machines. According to The Mobile Press Register, the tissue mill had been paying $1.5 million per month for energy services under an agreement with MESC. Without the agreement, the bills rise to about $2.5 million per month. A spokesman for MESC told the newspaper K-C's higher bills are the result of higher natural gas prices, which have increased 125% over the last 18 months.

FiberMark completes purchase of DSI

FiberMark, Inc. completed its purchase of Rexam Decorative Specialties Inter-national (DSI) from British packaging company Rexam plc for approximately $140 million in cash. The acquisition was completed Apr. 18 and was financed through the sale of $230 million of 10.75% senior 10-year notes due in 2011. The proceeds from the offering were also used to refinance existing debt. DSI has six production facilities in the U.S. and the U.K., including specialty paper mills and converting facilities in South Hadley and West Springfield, Mass., and Brownville and Lowville, N.Y. FiberMark, headquartered in Brattleboro, Vt., is the leading U.S. producer of technical specialty papers and fiber-based materials, supplying industrial and consumer markets worldwide. With the DSI acquisition, FiberMark will have 16 production facilities located in the eastern U.S. and Europe. Total production of specialty papers and filter media is now approximately 150,000 tpy. FiberMark reported 2000 annual revenues of $355 million.

Concessions sought at Iroquois Falls

Abitibi-Consolidated Inc. is considering a possible future closure of a 50,000 mtpy specialties machine at its Iroquois Falls, Ont., mill and wants union workers there to agree to a no-strike or lockout when their contract expires in April 2004. The company said that in return for a no strike agreement, it would give workers compensation that matches the "industry pattern" at that time. In addition, the company wants to put in place programs that will reduce staff levels to 410 employees from 535 by 2004 through attrition.

European news PM may land in Canada

Holmen Paper of Sweden has sold its 210,000 mtpy No. 11 newsprint/magazine paper machine from its Hallsta, Sweden, mill. The machine, No. 11, was sold through a machine broker to an unspecified buyer with the stipulation that the buyer could not reinstall the machine in Europe. Financial terms of the sale were not disclosed. An industry source said that there have been reports that the machine will be installed in a mill in eastern Canada. The Hallsta mill has three other paper machines that produce a combined total of approximately 455,000 mtons of newsprint and magazine papers.