Nine Dragons Paper to Acquire Two Catalyst Paper Pulp and Paper Mills
HONG KONG - May 29, 2018 - ND Paper LLC, a wholly-owned subsidiary of Nine Dragons Paper (Holdings) Limited, announced that it has signed a definitive agreement with Catalyst Paper Corporation to acquire the Rumford, Maine and Biron, Wis., paper mills for $175 million. The consideration paid will be satisfied by the Company through its existing cash and bank borrowings.
“We are very pleased to welcome the Rumford and Biron mills to the Nine Dragons family. We are committed to making these mills more competitive on a global scale, while staying true to our core values as an environmentally friendly and socially responsible enterprise with utmost respect for our employees,” said Yan Cheung, Chairlady of Nine Dragons. “We look forward to working with the teams and communities in Maine and Wisconsin as we embark on this next phase of expansion together.”
The acquisition is an upstream integration of the Company’s current business and is an important step in executing the Company’s global fiber sourcing and customer strategy. The acquisition is expected to generate significant benefits for both the mill sites and Nine Dragons:
- Nine Dragons will gain access to high quality virgin fiber, resulting in increased access to a more secure and cost-effective channel for raw material supply
- Nine Dragons will diversify its manufacturing base
- The acquisition and future capital investment in growing the mills’ capabilities in high growth packaging paper and pulp products will help invigorate the local Wisconsin and Maine economies, allowing them to stay competitive and prosper in the global market
The Rumford and Biron paper mills are engaged in the business of manufacturing and distributing certain types of pulp and paper products. The mill in Rumford is a fully-integrated pulp and paper mill consisting of (i) three paper production lines, with a combined annual capacity of approximately 550,000 metric tons, which are capable of producing coated one-side, coated freesheet and coated groundwood grades and (ii) two kraft pulping lines that produce both hardwood and softwood grades and have excess production capacity supplying all internal needs, selling approximately 120,000 metric tons of kraft pulp to the market. The mill in Biron is a pulp and paper mill consisting of two paper production lines with a combined annual production capacity of 340,000 metric tons producing coated groundwood grades.
Based on unaudited historical financial summaries, the Rumford and Biron paper mills for the twelve months ended March 31, 2018 generated total sales of $744 million. The consideration paid represents a multiple of less than 6.0 times Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) based on the mills’ last twelve months EBITDA as of March 31, 2018 and less than 4.0 times EBITDA based on the first quarter 2018 annualized rate. The acquisition is expected to be accretive to Nine Dragons’ earnings per share in calendar 2018.
Closing of the acquisition is expected to take place by the end of the second quarter and is subject to customary terms and conditions.
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of Printing Impressions.