Repap Manitoba also being sold ... here is Canada Newswire press release
REPAP ENTERPRISES INC. PLANS SALE OF REPAP USA AND REPAP MANITOBA
MONTREAL, July 9 /CNW/ - Repap Enterprises Inc. today announced that the
company has signed a letter of intent with Consolidated Papers, Inc. of
Wisconsin, USA, to sell its wholly-owned subsidiary, Repap USA, Inc., for a
total consideration of US$674 million, comprised of US$433 million for net
debt, US$14 million for post-retirement benefits and US$227 million for
equity, subject to closing adjustments. The sale is expected to close late in
the third quarter 1997. Repap USA is the holding company for Repap Wisconsin
Inc., Repap's United States-based coated paper operation, and Repap Sales
Corporation, which provides coated paper sales and marketing services.
Once a definitive agreement is reached, the transaction is subject to the
approval of the companies' boards of directors and United States federal
regulators. Net proceeds from the sale will be used primarily to reduce
liabilities at the Repap Enterprises level.
Repap also announced that it has reached an agreement in principle with
Tolko Industries, Ltd. for the sale of its kraft paper and lumber operations
located in The Pas, Manitoba. A definitive share purchase agreement will be
finalized and signed shortly, with a closing expected later in the summer.
Tolko is a British Columbia based, private forest products company currently
employing 1300 people, with annual sales of $500 million from manufacturing
and marketing facilities in British Columbia and Alberta.
Repap intends to continue to operate its New Brunswick coated paper,
market pulp and lumber operations, which generated an operating margin of $253
million and net income before unusual items of $114 million in the peak year
1995. Repap New Brunswick is a fully integrated operation with 492,000 tons of
coated groundwood paper capacity on two modern machines and the most
productive capacity per machine in North America.
Short and longer-term market fundamentals for coated groundwood paper
appear to be favourable. Prices increased US$60 per ton in the second quarter,
and a further price increase of US$80 per ton is being implemented in the
third quarter. Pulp prices are also increasing, and an aggressive program to
reduce costs by over $20 million in 1997 compared with 1996 is expected to
further benefit Repap New Brunswick's operating margins.
Repap Enterprises is an integrated, North American forest products
company with a current annual capacity of 1,000,000 tons of coated paper,
170,000 tons of superior strength kraft paper and lumber operations in
Manitoba and New Brunswick.
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