Cascades Selling its Dopaco Converting Business

Cascades Inc., Kingsey Falls, Quebec, has entered into an agreement to sell its Dopaco Inc. converting business to Reynolds Group Holdings Ltd. for $400 million. Dopaco’s end markets are primarily in the fast food restaurant industry.

Net proceeds from the transaction will mainly be used to pay down Cascades' debt. In connection with the transaction, Cascades will continue to supply boxboard to Dopaco through a five-year supply agreement.

In a release announcing the sale, Alain Lemaire, president and CEO of Cascades, says, "While we have always considered our ownership in Dopaco to be a good investment, I am pleased to announce this transaction, which unlocks significant value for our shareholders. In fact, this divestiture is part of our overall strategy to gain more financial flexibility and streamline our portfolio of assets to pursue the development of our core tissue, packaging and recovery operations. This is why the net proceeds will be used to reduce debt. Our improved balance sheet, combined with the recent refinancing of our credit facility, will allow us to position our asset base amongst the best in the industry in terms of productivity and profitability."

The deal is expected to be complete by the end of April 2011.