A United States-based subsidiary of Hong Kong-based Nine Dragons Paper (Holdings) Ltd. has entered into an agreement with Montreal-based Resolute Forest Products Inc. to purchase Resolute’s recycled-content bleached kraft pulp mill in Fairmont, West Virginia.
According to a press release issued by Oakbrook Terrace, Illinois-based ND Paper LLC, Resolute will receive $55 million “plus certain elements of working capital, payable in cash” for the mill. Nine Dragons says it plans to use “existing cash on its balance sheet” to fund the transaction.
“We are thrilled to add the Fairmont mill to Nine Dragons’ global portfolio,” says Ken Liu, CEO of ND Paper. “Our acquisition of the Fairmont mill enables us to further our U.S. and global growth, and sustains the momentum commenced by our recent acquisitions of the Biron, Wisconsin and Rumford, Maine, pulp and paper mills acquired from Catalyst Paper in [May] 2018. Not only is this transaction consistent with our long-term strategy of environmentally-sustainable papermaking, but also it further supports Nine Dragons’ company-wide fiber sourcing requirements and global growth initiatives.”
The Fairmont mill produces recycled-content pulp used in packaging and tissue products. Located in the northern part of West Virginia, the mill has an annual production capacity of nearly 220,000 metric tons and is one of three pulp mills in the world that produces air-dried recycled pulp, according to ND Paper.
Through the acquisition, ND Paper says it will gain access to high-quality recycled pulp and will diversify its manufacturing base. The company also says it intends to make capital investments in the mill that will “expand its current capabilities and inject growth into the West Virginia economy, particularly in the surrounding community.”
Nine Dragons operates nine mills and 39 paper machines with total annual production capacity of more than 14 million metric tons. The company was established in 1995.
ND Paper says it expects to close on the acquisition by the end of October, “subject to customary closing conditions and approvals,” and that it has agreed to offer employment to the Resolute mill’s workers, “effective upon closing of the acquisition.”
ND Paper worked in cooperation with New York-based Sonenshine Partners LLC as its financial advisor and Cleveland-based Jones Day as its legal counsel to structure the acquisition. Toronto-based BMO Capital Markets acted as the financial advisor on behalf of Resolute.
The acquisition occurred within days of another U.S. paper or pulp mill being purchased by an Asian company. In late August, China-based investment group Global Win Wickliffe LLC acquired an idled Verso Paper mill in Ballard County, Kentucky, with plans to reopen the facility by the end of 2018 after investing in equipment and technology at the facility. The mill has been idle since mid-2016.
Boston-based forest products information services provider RISI says sources have indicated to it that Global Win Wickliffe is investing on behalf of Shanying International, one of China’s five largest containerboard producers. If so, the mill in Kentucky would be Shanying’s first pulp and paper production facility in the United States, according to RISI.
According to a news release issued by the office of Kentucky Governor Matt Bevin, Global Win Wickliffe plans to invest about $150 million to upgrade the mill, following up on its $16 million acquisition of the facility from Verso.