Neenah Paper to Sell Nova Scotia Timberlands for C$82.5 Million

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Neenah Paper, Alpharetta, Ga., USA, this week announced it has agreed to sell its remaining 475,000 acres of timberlands in Nova Scotia for C$82.5 million to Northern Pulp Nova Scotia, through their affiliate, Northern Timber Nova Scotia. Neenah will receive cash at the time of closing, which is expected to occur before March 31. Northern Pulp Nova Scotia is a portfolio company of Atlas Holdings LLC and Blue Wolf Capital Management , New York, N.Y., USA. As part of the transaction, Northern Timber will sell 55,000 acres of environmentally-sensitive land to the Province of Nova Scotia, a major step toward the Province's goal of protecting 12% of all lands by 2015. The Province will also have an option to purchase additional lands in the future.

The Provincial government is lending Northern Timber $75 million to support the transaction, which secures a steady supply of wood fiber required to run Northern Pulp's mill in Abercrombie, located in Pictou County, Nova Scotia. It also ensures that nearly a half million acres of Nova Scotia forest remains managed by a Nova Scotia-based company, supporting not only the Northern Pulp mill but related sawmill, timber contractor, construction, and equipment maintenance industries. Subsequent to the land acquisition, Northern Pulp will invest $5 million in technology and equipment to reduce odor emission at its Abercrombie Point manufacturing facility.

Atlas and Blue Wolf acquired the Pictou mill and formed Northern Pulp Nova Scotia in June 2008. The mill, founded in 1967, manufactures pulp used in tissue, printing, and writing papers. It has a production capacity of some 270,000 metric tpy, the bulk of which is northern bleached softwood kraft (NBSK) pulp.

Sean Erwin, CEO of Neenah Paper, said that "with this transaction, we have successfully completed our strategy to exit pulp and transform into a larger, more global specialty and premium paper company. This sale is the fourth and final transaction in this transformation, and we believe the approach we took to separate the sales of the timberlands from the pulp mills optimized the value we received for these assets. With this sale, ownership of the woodlands is again closely aligned with the pulp and forestry companies in Nova Scotia. Neenah Paper will use the proceeds to pay down debt, including a $40 million term loan that is part of our revolving credit facility, and this will result in an attractive and flexible capital structure going forward."