Tembec has secured additional financing to fund a portion of the Temiscaming, Québec, specialty cellulose cogen project. The financing includes a previously-announced additional loan in the amount of $17.8 million from Investissement Québec and an amended and restated credit agreement with Integrated Private Debt Fund III LP. Integrated Private Debt Fund, as an agent for the project's senior lenders, is increasing its credit facility by $10 million.
To the end of August 2013, the company has spent $131 million on the project, which has a total estimated cost of $235 million. The project involves the replacement of three low-pressure boilers with a single new high-pressure boiler designed to burn waste sulphite liquor generated by the specialty cellulose manufacturing process. The project also includes the installation of a new 50-megawatt electrical turbine.
Completion of the boiler portion is scheduled for April 2014 and the start-up of the turbine should occur in September 2014. Tembec expects that the upgrade will improve annual adjusted EBITDA by approximately $48 million. The improvement will include approximately $28 million of incremental electricity revenues, $7 million of operating and maintenance cost reduction and $13 million of productivity and margin enhancements associated with an annual production increase of 15,000 tonnes of specialty cellulose pulp.