Resolute Forest Products has agreed to sell its paper and pulp mill in Catawba, South Carolina, US, to New-Indy Containerboard for about $300m.
Resolute owns or operates about 40 manufacturing plants in the US and Canada.
The price for the mill includes about $260m in cash and assumption by the buyer of about $40m of largely pension-based liabilities.
The acquisition includes a kraft mill and a pulp dryer used to produce market pulp, a thermomechanical pulp mill, and a lightweight coated paper machine.
Upon completion of the transaction, New-Indy will provide employment to the current 460 members working at the Catawba plant.
The transaction, which is subject to certain closing conditions, is expected to be closed by the end of the year.
New-Indy, which was established in 2012 as a joint venture by The Kraft Group and Schwarz Partners, manufactures and supplies recycled containerboard to the corrugated box industry.
Headquartered in Ontario (California), New-Indy operates manufacturing plants in Ontario and Oxnard (California), Peoria (Illinois) and Hartford City (Indiana), along with a recycling facility in Kendalville (Indiana).
Resolute president and CEO Yves Laflamme said: “This transaction will allow us to realize significant value for an asset whose greatest earnings potential lies with the investment in and diversification of the mill’s operations, as proposed by New-Indy.
The company expects to utilize the proceeds from the asset sale to further reduce its net debt and enhance shareholder value.
Laflamme said: “We will continue to explore high-return strategic opportunities to grow our core businesses in line with our transformation strategy. Over the coming days, we will communicate with our customers to discuss the impact of the transaction and the transition of supply for their orders of lightweight coated paper and market pulp.”
In August this year, Resolute agreed to sell its Fairmont, West Virginia, recycled bleached kraft pulp mill to ND Paper, a subsidiary of Nine Dragons Paper.
Nine Dragons is primarily engaged in the production and sale of several packaging paperboard products.