Abitibi-Bowater Seeks To Sell Paper Mills

According to published reports, Abitibi-Bowater is seeking bankruptcy court approval to sell four of its closed paper mills to the scrap metal firm American Iron & Metal (AIM), headquartered in Montreal. The company is looking to sell its idled mills in Beaupre and Donnacona, Que.; Dalhousie, N.B.; and Thunder Bay, Ont., for the reported price of $8.7 million.

In total, the company hopes to recover at least $13.8 million from the sale of four paper mills in Ontario, Quebec and New Brunswick and the machines that are gathering dust inside the vacant buildings.

It would also receive $100,000 from AIM as part of a land swap with the Fort William First Nation Development Corp. for unused, vacant lands.

The scrap metal company would also pay AbitibiBowater 40 percent of the money raised from the sale of the paper machines. Even if they are sold for scrap, American Iron would pay at least $5 million.

According to the news report, AIM would assume all environmental liabilities associated with the closed mills.

Owner Herbert Black said he’s open to ideas to reuse the vacant mills as long as they abide by conditions of the sale agreement with AbitibiBowater.

"I’m totally flexible to help the people," he said in an interview, noting that somebody is objecting to the sale.”

Failure to conclude a deal could see the buildings scrapped for their metal value. Given the depressed state of the forestry products industry, some of the paper machines may suffer the same fate, Black said.

"Some is scrap and some is marketable, it’s like everything else. There’s a lot of paper mills closing across the world."

AbitibiBowater filed for protection from creditors last year amid mounting losses and has been streamlining operations, cutting jobs and selling money-losing mills and other assets to restructure its balance sheet and cope with the company’s large debts.

AbitibiBowater said the prospective owners can do what they want with the sites as long as they aren’t used to produce paper.

"One of the options is dismantling for metal, but it’s their decision," said spokesman Jean-Philippe Cote.

The four mills in question were permanently closed between 2007 and 2009 after 82 to 94 years of operation.

The land swap would ensure the purchaser is provided with access to the mill. It would also allow Abitibi’s Canadian subsidiary Abitibi-Consolidated to retain access to its landfill lands.

In a follow up call, AIM’s Black says that any deal with Abitibi-Bowater is contingent on the bankruptcy court approving the sale. He expects a decision to be made by the end of April.

AbitibiBowater last fall sold its idled Belgo paper mill in Shawinigan to Recyclage Arctic Beluga Inc.

It is also looking to sell three closed mills in Quebec. The mills in Roberval, Saint-Fulgence and Lebel-sur-Quevillon have been closed since last year. Winnipeg Free Press

Smurfit Kappa Group, Mondi Group Agree to Asset Swap

Smurfit Kappa Group plc (SKG) announces that it has signed an asset swap agreement with Germany- Mondi Group, an integrated packaging and business paper producer. Under the arrangement, SKG will acquire Mondi’s corrugated operations in the United Kingdom, while Mondi will acquire SKG’s Western European sack converting operations.

Mondi’s UK corrugated operations include three corrugated box plants. The three facilities reported a combined 2009 full year earnings before interest, tax, depreciation and amortization (EBITDA) of£7.1 million (US$11 million).

In return, SKG is disposing of its Western European sack converting operations, comprising four plants in France, three in Spain, and one in Italy, as well as a number of sales offices.

“We are pleased to announce this asset swap agreement, which further strengthens the Group’s leadership in its core corrugated packaging grade, and enhances the efficiency of its integrated system in the increasingly attractive UK market,” says Gary McGann, SKG’s CEO.