Catalyst to acquire Snowflake newsprint mill
Catalyst Paper Corporation has entered into a definitive
agreement with AbitibiBowater to acquire its Snowflake, Arizona recycled
newsprint mill for a total consideration of US$161 million in cash.
The purchase price excludes trade receivables of approximately US$19
million that are being retained by AbitibiBowater. The acquisition will
be financed through a combination of Catalyst Paper’s revolving credit
facilities and a proposed CN$125 million rights offering.
The Snowflake mill, a recycled newsprint producer with annual production
capacity of 375,000 metric tons, is regarded as one of the lowest cost
newsprint mills in North America. The acquisition of the Snowflake mill
will increase Catalyst Paper’s total newsprint production capacity to
approximately 980,000 metric tons. The mill also houses a corrugating
medium machine owned by Smurfit Stone Container Corporation, which is
operated by the Snowflake mill.
The acquisition is expected to close in the second quarter of 2008.
The transacting parties have also agreed to a three-year supply contract
under which AbitibiBowater will provide approximately 40% of the Snowflake
mill’s recycled fiber supply in the first year, decreasing in proportion
over the life of the agreement.