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SPECIALTY PAPER: DONOHUE TO UPDATE MILL IN LUFKIN, TX

MONTREAL, QC — Donohue Inc. plans to invest $230 million (US) to modernize its newsprint and specialty paper mill in Lufkin, TX. As part of its efficiency program, the company will retire three of th…

MONTREAL, QC — Donohue Inc. plans to invest $230 million (US) to modernize its newsprint and specialty paper mill in Lufkin, TX. As part of its efficiency program, the company will retire three of the four existing paper machines and replace them with a single, more modern one of comparable capacity, and also improve the kraft pulp mill to comply with the stricter environmental standards set by the new federal Cluster Rules in the United States.

The Company has signed a memorandum of understanding with Terrace Insurances (NZ) Ltd., a wholly owned subsidiary of Fletcher Challenge Limited of New Zealand, whereby Donohue agrees to buy a Bel Baie III paper machine. A definitive purchase agreement for this machine is expected to be signed by March 1, 1999, after the usual due diligence process.

The 330-inch paper machine, manufactured by Beloit in 1988, was operated by the Gold River Newsprint Partnership in BC from 1988 to 1993. It was acquired by Terrace in 1995, and dismantled and packed for reinstallation on another site. “The machine has been looked at by our technical people,” said Andr Dupras, vice-president, communications and public affairs, “and they said it should be all right.”

If the deal goes through, installation of the new machine will begin immediately, which will take about a year to complete, Dupras added. Start-up is likely during the second half of 2000. It will have an annual capacity of 250 000 tonnes of uncoated supercalendered specialty paper (SC-B) and HiBrite.

Michel Desbiens, Donohue president and chief executive officer, is enthusiastic about the project: “This investment clearly demonstrates the extent to which Donohue is committed to enhancing its facilities and equipment in Texas.” This latest $230 million (US) is in addition to the $102 million (US) investment announced last October for the modernization of the operations in Sheldon TX. Donohue will complete the modernization of its two Texas mills within two and a half years of their acquisition on June 1, 1998.