Cascades, Partners to Build New Containerboard Mill in New York State

Cascades Inc., Kingsey Falls, Qué., Canada, this week reported that its Norampac division will invest in a new, state of the art containerboard mill in New York State, USA, to be known as the Greenpac Mill LLC, a corporation created with the Caisse de dépôt et placement du Québec (the Caisse), Jamestown Container, and one other industry partner. Construction will begin next month, with startup scheduled for the summer of 2013.

The Greenpac mill will be constructed at a total cost of $430 million on property located adjacent to the existing Norampac facility in Niagara Falls, N.Y. It will produce a lightweight linerboard, made with 100% recycled fiber, on a single Metso,(Finland) machine having a width of 328 in. (8.33 m) with an annual production capacity of 540,000 short tons. The machine will be one of the largest of its kind in North America.

The value of Metso's order is approximately EUR 65 million. It includes a complete linerboard machine from headbox to roll handling, including air systems, machine pulpers, a broke collection system, and a quality control system. The delivery will also include board machine clothing under a long-term agreement.

"The Greenpac mill will include numerous technological advances, making it a unique project of its kind in North America. In particular, the linerboard that will be produced on the new machine will be able to achieve optimal strength while maintaining a low basis weight, thereby allowing our customers to better respond to the growing trend towards lightweight packaging," said Marc-André Dépin, president and CEO of Norampac.

The mill's building and machinery will be designed for optimal energy efficiency and many of the operations will be automated. Also, process water will be treated and reused to reduce consumption as much as possible, and the state of the art management system for recycled fiber will have a positive effect on the environmental performance of the mill, the company said.

Voith, Germany, will provide the stock preparation equipment and anaerobic effluent treatment plant, and Siemens, Atlanta, Ga., USA, will provide the power and control technology (see detailed item in Pulp & Paper section below). Fiber supply will be carried out by Cascades and its recovery operations. There are significant sources of old corrugated containers (OCC) in the region where the mill will be built, which will favorably impact Greenpac's raw material procurement. In regard to sales, customers have already been secured for more than 80% (435,000 tpy) of production. Norampac's converting operations will purchase 170,000 tpy (39%) of this production.

Alain Lemaire, president and CEO of Cascades, noted that the investment "is the result of combined efforts of Cascades and its partners, and is consistent with our development strategy that aims to position the company among the leaders in terms of productivity and profitability in the packaging and tissue sectors. As we have stated in the past, we strongly believe that Cascades' future success will be dependent on our ability to offer high performance, innovative products that will better meet the needs of our customers, at a cost that will be among the lowest in the industry.

"The innovative structure of this partnership will allow us to reach this objective while maintaining the financial flexibility achieved through recent divestitures," Lemaire added. "We are also confident in regard to industry's mid- and long-term perspectives, and we strongly believe that Greenpac will contribute positively to our net profitability once full ramp-up is achieved."

The $430 million cost of the project will be financed by a $140 million equity investment in Greenpac, of which $83.6 million (59.7%) will be invested by Cascades, $28.3 million (20.2%) will be invested by the Caisse, and $28.1 million (20.1%) will be invested by Jamestown Container and another industry partner. The remainder of the financing will be in the form of debt, including senior debt in the amount of $228.9 million, which was led by GE Capital, and subordinated debt in the amount of $61 million. Senior debt will be provided by an international banking syndicate managed by GE Capital. The subordinated debt will be provided by the Caisse ($45.75 million) and Cascades ($15.25 million), and will serve to bridge expected refundable tax credits.

Norampac will assume responsibility for managing day-to-day operations of Greenpac. Construction of the mill will create 108 new jobs in the State of New York, as well as contribute to the economical development of the region.

Created in 1997, Norampac, a division of Cascades, is the largest containerboard producer in Canada and the sixth largest in North America, with nearly 5,000 employees. Today, Norampac operates several containerboard and boxboard mills, corrugated product plants, folding carton plants, and a graphic center in Canada and the U.S.