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TAKEOVER: FINE AGREEMENT SEES DOMTAR INTO US MARKET (June 01, 2001)


June 1, 2001
By Pulp & Paper Canada

MONTREAL, QC/ATLANTA, GA — Domtar Inc is poised to enter the US market. A letter of intent, signed by both Domtar and Georgia-Pacific Corp., will transfer G-P’s stand-alone uncoated fine paper mills …

MONTREAL, QC/ATLANTA, GA — Domtar Inc is poised to enter the US market. A letter of intent, signed by both Domtar and Georgia-Pacific Corp., will transfer G-P’s stand-alone uncoated fine paper mills at Ashdown, AK, Nekoosa and Port Edwards, WI, and Woodland, ME, to Domtar, giving Domtar a wider geographic profile. Until now, almost all of Domtar’s mills were in Canada.

While Domtar is the largest producer of specialty and fine papers in Canada, the agreement will elevate the company from seventh to second place in the North American market, after International Paper Co., by doubling its fine-paper production capacity.

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Although the terms of the deal were not disclosed, The Wall Street Journal quoted industry sources as saying that Domtar is expected to pay approximately $1.5 billion US, likely in cash. The agreement is contingent on the completion of due diligence, execution of a definitive agreement and customary approvals, to be completed in the second quarter of 2001.

According to Laurent Lemaire, chief executive of Cascades Inc., the Domtar purchase just might give Cascades a chance to increase its ownership in Norampac. A 50-50 Cascades-Domtar joint venture, Norampac has been quite successful by uniting both companies’ packaging and containerboard operations, and continues to provide profits to both partners. “We’ve never made it any secret Norampac is at the top or our wish list and we ultimately want 100% ownership,” said Lemaire. However, he had to admit that, despite talks with Raymond Royer, Domtar’s chief executive, there are no changes foreseen in the near future.

JOINT VENTURE: ABITIBI & NORSKE INCREASE STAKE IN PAN ASIA PAPER

MONTREAL, QC/SKOGN, NORWAY — Abitibi-Consolidated of Montreal and Norske Skog of Norway are paying US$350 million to increase their stake in Pan Asia Paper Co., Asia’s leading newsprint maker. Through buying Hansol Paper’s (of South Korea) one-third stake of Pan Asia, the companies hope to increase their position in one of the world’s fastest growing markets.

Pan Asia’s production capacity is 1.425 million tons of newsprint and ground wood paper per year, representing about 30% of Asia’s total market, excluding Japan. Production facilities are located in Shanghai, China, Singburi in Thailand and at Chonju and Chongwon in South Korea.

The deal is expected to close in July, subject to regulatory approvals.

CREATING JOBS: FIRST NATIONS FORESTRY PROGRAM EXTENDED

OTTAWA, ON — The Government of Canada will continue supporting innovative First Nations forestry initiatives as Ralph Goodale, Minister of Natural Resources Canada and Robert Nault, Minister of Indian and Northern Affairs Canada, today announced the First Nation Forestry Program will be extended until the end of March, 2002. The FNFP aims to improve economic conditions in First Nations’ communities by providing the opportunity to enhance their capacity to manage forests; operate and participate in forest-based businesses; and increase cooperation and partnerships among First Nations.

Since 1996, the FNFP has supported close to 1 000 projects with $25 million in federal funding, created 55 000 weeks of work and helped 3 900 First Nations workers gain valuable job experience.

BRIEFLY

Concert Industries Ltd. announced its new airlaid facility located in Gatineau, QC, officially passed from construction to the commissioning phase this past April. The construction of the 330 000 ft2 manufacturing plant began in February of 2000 and will house two new state-of-the-art airlaid production lines that will have an estimated annual rated capacity of 38 000 tonnes representing approximately 45% of Concert’s global rated capacity.

Ningxia Meili Paper Co., Yinchuan, PR China, recently added a Poseidon PPM Clarifier and a Poseidon Saturn Clarifier to its 150 t/d MOW deinking system.


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