Friday, October 1, 2010

BUSINESS: Maine pulp mill at Woodland may be sold to Hong Kong buyer

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Domtar pulp plant nearing sale to Hong Kong investors
$64M sale would promise stability to pulp producer

Gov. John Baldacci (center) concludes a tour of Domtar’s pulp mill in Baileyville in March 2009 along with then-mill manager Tim Lowe (left) and Washington County Sen. Kevin Raye of Perry.

9/30/10 11:48 pm Updated: 10/1/10 02:24 am
By Sharon Kiley Mack
BDN Staff

BAILEYVILLE, Maine — An announcement could come as early as today regarding the potential sale of Domtar’s hardwood pulp facility to a Hong Kong investment group, International Grand Investment Corp.

Negotiations between Domtar and International Grand Investment reportedly still were under way late Thursday.

Gov. John Baldacci said late Thursday that the sale could bring stability to the area and ensure that the more than 300 people working in the pulp mill can be secure in their jobs. All current employees are expected to be retained.

The sale, at a reported $64 million, would be effective immediately, according to an announcement by Domtar that was obtained by the Bangor Daily News.

The new company will be known as Woodland Pulp LLC, recognizing the village of Woodland within Baileyville, where the mill is located.

“The sale of the Woodland mill is part of our strategy to reduce our exposure to hardwood pulp markets; the majority of our market pulp activities are in softwood and fluff pulp grades,” John D. Williams, president and chief executive officer of Domtar, said in the announcement. “We concluded that this transaction was in the best interest of the company, in terms of strategy, and for the mill as it continues the employment of its dedicated work force.”

Baldacci said that Domtar’s ownership always was perceived as temporary, as the company is a paper company, not a pulp manufacturer.

The Baileyville mill is Domtar’s only pulp mill. It has an annual production capacity of 395,000 metric tons. International Grand Investment annually brokers more than 800,000 tons of pulp.

International Grand Investment represents individual investors in pulp trade and imports. This is the corporation’s second pulp mill acquisition in the U.S. this year; the other mill is on the West Coast. International Grand Investment maintains corporate offices in Delaware.

“With this sale, the workers at Domtar won’t have to worry,” Baldacci said. “The community won’t have to worry.

Rosair Pelletier, Maine’s senior forest products adviser, said that when Domtar closed in 2009 for six weeks and then reopened, it was only a temporary move.

“The company was looking to transition out of pulp,” he said. “Domtar is a papermaker. [International Grand Investment] concentrates on pulp. It is a big corporation that deals only with pulp. This is such good news because it will bring stability to the entire area. It is also good news any time a new, major investor comes to Washington County.”

Baldacci said Domtar has had a $15 million annual payroll in Washington County and the sale will stabilize that. “No one will have to look over their shoulder now,” he said.

Pelletier said that International Grand Investment “will keep the mill in tip-top condition” and that could include a $20 million to $30 million investment in infrastructure each year.

Baldacci said it is too early to say if a mill expansion is planned or if new workers will be hired. “I think they want to hit the ground running and get into production first,” Baldacci said.

“Since 2001, I have appreciated Domtar’s commitment to the Woodland mill,” Baldacci said. “I want to convey my thanks and appreciation for their hard work in Washington County.”

The mill’s story

For more than a century, the Baileyville mill has been an integral part of Down East Maine.

Construction on St. Croix Pulp and Paper was begun in 1905 and completed in 1906. Soon after construction began, the village of Woodland, now within the town of Baileyville, grew up around the mill.

In 1964, Georgia-Pacific purchased the facility, owning and operating it until 2001, when it was purchased by Domtar, which is headquartered in Quebec.

One of Domtar’s first actions was to return Gordon’s Island, a tribal burial ground during the 1800s, to the Passamaquoddy Indian Tribe in May 2002. The mill operated well and during the period of Domtar ownership set production records and solidly established, through the shipment of market pulp, the viability of the Port of Eastport.

Declining paper markets forced the closure of the company’s only paper machine in 2007, but pulp production continued at the facility. In 2009 the global recession forced a six-week shutdown of the mill, but upon the mill’s restart in June 2009, the mill has had strong production numbers.

Today the mill employs 300 men and women. It is Washington County’s largest employer.


Bangor Daily News

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