SALE: ABITIBI DISCUSSES JOINT VENTURE
February 1, 1999 By Pulp & Paper Canada
MONTREAL — Abitibi-Consolidated announced that the company is in discussions with Groupe Cdrico, the major asset of Gestion Gilles Brub, to form a stand-alone joint-venture that would acquire the company’s Chandler, QC, newsprint mill as a one-machine operation.
The company also confirmed its intention to permanently shut down Chandler’s PM 2, idled indefinitely since January 11, 1999, effectively removing about 110 000 t/y of high-cost newsprint capacity from the market. About 200 jobs will be affected by the closure. Abitibi-Consolidated will take a one-time cost for the write-down of the machine and related severance costs of approximately $40 million, to be booked at fiscal year end 1998.
The joint-venture project being discussed would see Abitibi-Consolidated contribute the one-machine Chandler operation in exchange for a 40% minority equity position in the new joint venture and Groupe Cdrico would hold the remaining 60% majority position through the contribution of its six existing sawmills in the Gasp region of Qubec. The proposed joint-venture company would immediately move to lower costs and obtain synergies through the optimization of the combined fibre base as well as the construction of a $70-million TMP facility.
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