Uncertain Future for Enron Forest Products Group

Energy giant Enron Corp., the seventh largest newsprint producer in North America, recently agreed to be taken over by energy rival Dynegy Inc. Dynegy has given the forest products group, which falls under Enron's Wholesale Services business segment, an ``under review'' status in determining which businesses are core or non-core.

Whether Dynegy sheds or retains its papermaking assets may not be known before next summer, when the transaction is expected to close. The forest products group consists of a mill on the east coast and two in eastern Canada, which will require an infusion of capital for improvements.

Last year, Enron Industrial Markets purchased Garden State Paper from Media General, a communications company, for roughly $72 million. Located in Garfield, N.J., the mill employs 290 people and has a capacity of 240,000 short tons a year of newsprint.

Earlier this year, Enron acquired Daishowa Forest Products Limited to gain ownership of its newsprint mill and related assets in Quebec City, Quebec. The former Daishowa Forest mill, now called Papiers Stadacona is integrated with a Thermo-Mechanical Pulp mill that feeds four paper machines and employs over 1,000 employees. The mill has studied the addition of a new de-inking plant, a bio-mass boiler, and modernizations to the four paper machines.

NLK Consultants and Enron share ownership in the Papier Masson mill in Masson-Angers, Quebec. The single machine mill employs over 300 workers and produces approximately 600 metric tons a day of recycled content newsprint.

Upon completion of the merger, the new Dynegy is expected to have revenues exceeding $200 billion and $90 billion in assets. Industrialinfo.com