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Fortress Paper to convert Fraser’s Thurso mill to dissolving pulp, bioenergy (March 19, 2010)


March 19, 2010
By Pulp & Paper Canada

Fortress Paper Ltd., a producer of security and specialty papers, has agreed to acquire the assets of Fraser P…

Fortress Paper Ltd., a producer of security and specialty papers, has agreed to acquire the assets of Fraser Papers’ northern bleached hardwood kraft mill in Thurso, Quebec. Fortress Paper intends to convert the mill into a specialty cellulose (dissolving pulp) operation, and concurrently, to build a biomass-based cogeneration plant at the Thurso mill which will produce green electricity.
The Thurso mill will be acquired by a wholly-owned subsidiary, Fortress Specialty Cellulose Inc.
The company expects to spend approximately $153 million to convert the non-operating northern bleached hardwood kraft (NBHK) mill into a high quality specialty cellulose mill and to construct a new cogeneration facility. The specialty cellulose mill is planned to have an annual production capacity of more than 200,000 air dried tonnes and is expected to be completed in mid-2011.
Fortress Specialty will focus on producing dissolving grade cellulose for the textile industry, primarily targeting viscose fibre (rayon) products.
Fortress Paper also plans to construct a 25 megawatt cogeneration facility to service a net 18.8 megawatt power supply agreement over a 15-year term. The location of the cogeneration facility provides it with access to on-site generation of biomass and an extensive local network of chip and other biomass suppliers. The cogeneration facility is expected to be supplying electricity in the fourth quarter of 2012.
Chad Wasilenkoff, CEO of Fortress Paper, states, “Once the conversion and cogeneration projects are complete, we will be entering a new product segment which offers long-term growth prospects and attractive margins. During the interim period, we will capitalize on the current strength of the NBHK pulp market. We feel it is important to emphasize that this is not an acquisition to enter into the pulp industry, but rather the opportunity to acquire assets that are ideally suited to be converted into a bio-refinery and produce high value-added products. We intend to strategically enter this sector at a time when demand exceeds current capacity. We believe this trend will continue over the next several years given the limited announced new capacity.”
The purchase price is $3 million. Because Fraser Papers Inc. is under creditor protection, the purchase is subject to court approval. As well, Fortress Paper has to renew collective agreements with three unions at the mill. The deal is expected to close by April 30, 2010.
Investissement Quebec has committed, by way of an agreement in principle, to grant Fortress Specialty a loan in the amount of up to $102.4 million.
Included in the assets being purchased from Fraser is approximately $9.9 million in credits (black liquor credits) granted under the Canadian government’s Pulp and Paper Green Transformation Program.
Fortress Paper is an international producer of security and other specialty papers, with two paper mills in Switzerland and Germany.

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