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Cascades greenlights Bear Island conversion, announces public equity offering


October 8, 2020
By P&PC Staff

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The Bear Island mill in Virginia. Photo: Cascades

Cascades has announced it plans to proceed with the Bear Island mill conversion project located in Virginia.

Subject to obtaining final permits, the currently idled newsprint machine will be converted to a first-quartile containerboard machine capable of producing high-quality, lightweight, 100 per cent recycled linerboard and medium for the North American market.

The company acquired the Bear Island mill from White Birch Paper in 2018.

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The plant will have an annual production capacity of 465,000 short tons and is scheduled to start up in the fourth quarter of 2022. It will operate at approximately 80 per cent of capacity by the end of 2023, reaching 100 per cent by the end of 2025.

The total cost of the Bear Island mill project will be US$380 million, which includes the initial US$35 million acquisition cost paid to White Birch Paper.

To finance the equity portion of the Bear Island mill conversion, Cascades has also announced a public equity offering.

The company has entered an agreement with CIBC Capital Markets, RBC Capital Markets and BMO Capital Markets on behalf of a syndicate of underwriters. The underwriters will purchase 7,441,000 common shares on a “bought-deal basis” at a price of $16.80 per common share to comprise an offering of approximately $125 million.

“This investment, one of the largest in our company’s history, is a decisive and very important strategic move in the modernization of our packaging assets,” says Mario Plourde, president and chief executive officer of Cascades, in a statement.

“By adding the Bear Island mill to our platform, more than 60 per cent of our containerboard manufacturing capacity will be in the top quartile of the industry. In addition to offering a unique development platform, this plant will strengthen our geographic positioning and presence in the U.S. and will enhance the competitiveness of our asset base and our product offering regardless of economic conditions.”

“From an operational standpoint, Bear Island will also optimize the flexibility of our manufacturing platform by providing a product offering that will be complementary to its sister plant Greenpac, located in Niagara Falls (New York),” says Plourde.

Cascades will initially convert volume in its existing converting facilities in addition to entering into long term agreements with customers.

The remaining tonnage that will initially be sold on the open market is expected to decrease, reducing market exposure.