Catalyst Paper In Agreement to Sell U.S. Assets to Nine Dragons Paper

SEATTLE (Scrap Monster): Richmond, B.C.-based Catalyst Paper Corporation has announced that it has reached an agreement to sell its U.S. assets to ND Paper LLC, a wholly-owned subsidiary of Hong Kong-based Nine Dragons Paper.

The transaction is valued at $175 million and is expected to close by end-Q2 this year, subject to approval by Catalyst’s shareholders, in addition to other customary regulatory approvals. The shareholders’ vote is scheduled to take place on June 11, said company press release. Sources indicate that three major shareholders who hold approximately 87% of the outstanding shares have already agreed to vote in favor of the transaction.

As part of the agreement, ND Paper LLC will acquire all of Catalyst’s assets in the U.S., including the operations center in Dayton, Ohio and the two mills located in Rumford, Maine and Biron, Wisconsin.

According to Ned Dwyer, Catalyst President and CEO, the proposed transaction will allow the company to repay a significant portion of its debt. It must be noted that the company had gone bankrupt several years ago, thereby forcing it to creditor protection in 2012. Dwyer stated that the company will now focus on its Canadian operations. Incidentally, Catalyst Paper owns three mills in Powell River, Port Alberni and Crofton, which together employs around 1,600 people in the region.

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Yan Cheung, Nine Dragons Chairwoman noted that the company looks forward to work with the teams and communities in Maine and Wisconsin. The acquisition of Catalyst Paper mills is the first step in its next phase of expansion, Cheung said. Nine Dragons plans to invest in high-growth packaging paper and pulp products to keep both of the mills on a competitive footing, she added.

There are no plans for lay-offs at both the mills. There has been no clarification on possible job losses in Dayton operations center.