Cascades Links Up with Reno De Medici

Cascades Inc. and European-based Reno De Medici S.p.A. have signed a letter of intent to negotiate, on an exclusive basis, the terms and conditions for a possible combination of Reno De Medici and the European recycled board business of Cascades SA.

If completed, the combination would significantly increase the marketshare for the company’s cartonboard business in Europe. In addition to significantly increasing RdM's current production capacity, becoming one of the major players in the recycled board world market with more than one million tons per year, the combined operation would boost the company’s financial resources, and allow the company to better serve the industry.

Based on current estimates, it is anticipated that the new company could save as much as $25 million.

The combination would be structured in two steps: Combination of RdM and Cascades SA's recycled board business in France and Germany, as well as its sheeting operations in England, for a total production capacity of around 350,000 metric tons per year.

"The new Reno De Medici would be a global leader with a brighter future than either company would have on its own. We would be proactively improving the quality of our assets and products, as well as taking decisive actions to achieve a significant amount of synergies in the way we run our business. We strongly believe this would enable Reno De Medici to strengthen its leading position in the highly competitive global marketplace" said Giuseppe Garofano, chairman of Reno De Medici.

"I am very enthusiastic about the combination with Reno De Medici. With this transaction, we are presenting shareholders with new opportunities, combining Cascades' ability to create value through joint ventures and Reno De Medici's proven expertise in this industry. The combined group would be able to serve better any demand of global customers who increasingly look for global suppliers" added Mr. Laurent Lemaire, Executive Vice-Chairman of Cascades Inc. and Chief Executive Officer of Cascades S.A.

The parties hope to complete the due diligence and sign the agreement by this September.