Cascades adjusts capacity
Cascades Inc., Kingsey Falls, Quebec, has announced that it is moving forward to convert its White Birch Bear Island paper mill in Ashland, Virginia, to a containerboard mill that will produce lightweight, 100-percent-recycled linerboard and medium for the North American market. The company also has said it will progressively and permanently close its tissue production and conversion operations at its Pennsylvania plants in Ransom and Pittston between Dec. 7 of this year and Jan. 31, 2021.
Cascades initially acquired the Bear Island paper mill from Greenwich, Connecticut-based White Birch Paper in 2018 for $34.2 million. According to a news release from Cascades, it plans to convert the mill to containerboard production by the first quarter of 2021.
The total cost of the Bear Island conversion will be about $380 million, which includes the initial acquisition cost paid to White Birch Paper in 2018. To finance the equity portion of the Bear Island mill conversion, Cascades says it has entered into an agreement with CIBC Capital Markets, RBC Capital Markets and BMO Capital Markets on behalf of a syndicate of underwriters, pursuant to which Cascades will issue from treasury and the underwriters will purchase 7.441 million common shares at a price of $16.80 per common share on a “bought deal basis” for gross proceeds of about $125 million. Following the completion of this offering, the equity requirements of the Bear Island mill project will be fully financed, Cascades states.
The Bear Island plant will have an annual production capacity of about 465,000 tons and is scheduled to start up by the fourth quarter of 2022. It will operate at about 80 percent of capacity by the end of 2023, reaching 100 percent by the end of 2025.
“This investment, one of the largest in our company’s history, is a decisive and very important strategic move in the modernization of our packaging assets,” says Mario Plourde, president and CEO of Cascades. “By adding the Bear Island mill to our platform, more than 60 percent of our containerboard manufacturing capacity will be in the top quartile of the industry. In addition to offering a unique development platform, this plant will strengthen our geographic positioning and presence in the U.S. and will enhance the competitiveness of our asset base and our product offering, regardless of economic conditions.”
The paper machines being taken out of service at the Ransom plant have a total annual production capacity of 50,000 tons of tissue. Currently, the conversion of this volume into 6 million cases of product occurs primarily at the Pittston plant. These volumes will be moved to other Cascades plants and filled with additional capacity. The two sites employ a total of 229 workers.