Ponderay Newsprint might get new operator
Managing partner agrees to sell shares in Usk mill to top U.S. newsprint makerApril 23rd, 1998
Ponderay Newsprint Co., which owns the big paper mill at Usk, Wash., about 60 miles north of Spokane, could have a new managing partner by this summer.
Avenor Inc., the Montreal-based current managing partner and 40 percent owner of the plant, has agreed to sell all of its outstanding shares to Bowater Inc., of Greenville, S.C., for about $3.5 billion Canadian ($2.47 billion U.S.).
The transaction still must be approved by the shareholders of both companies and by appropriate regulatory agencies, but is expected to be completed by the end of June, according to a joint news release by the two companies.
Bruce E. Nunn, pulp mill manager at the Usk mill, says its unknown at this point what impact, if any, the transaction would have on the sprawling facility. However, Tom Garrett, the mills human resources manager, says, We really do see this as a positive thing, for Avenor and for Ponderay Newsprint Co. Weve had a great relationship with Avenor and see no reason why that shouldnt continue with Bowater.
Ponderay employs 195 people and expects to produce about 241,000 metric tons of newsprint this year. It will observe its 10th anniversary in November 1999. The plant was built at a reported cost of $300 million. When then-Washington Gov. Booth Gardner broke ground for the plant in October 1987, he said it represented the largest private capital expenditure in the state in a decade.
Ponderay Newsprint was formed by a U.S. subsidiary of Canadian Pacific Forest Products, and subsidiaries of five U.S. newspaper companies. Those companies are Central Newspapers Inc., Copley Press Inc., McClatchy Newspapers, Knight Ridder Inc., and Kearns-Tribune Corp. Avenor, which was spun off from Canadian Pacific, replaced Canadian Pacific as the mills managing partner in early 1994.
About two-thirds of the newsprint produced at the mill is used by the mills owners, and the rest is sold on the open market.
The company has struggled financially in recent years, as has the rest of the newsprint industry, due to a soft market. However, the average price for newsprint has rebounded somewhat over the last year or so, climbing well above $500 a ton.
Bowater, which is listed on the New York Stock Exchange, claims to be the largest producer of newsprint in the U.S. It also makes other types of paper and lumber products. It has five paper mills and 3.5 million acres of timberland in the U.S. and Canada.
Avenor is an international company that makes newsprint, pulp, white paper, and wood products. It claims to be one of North Americas largest suppliers of recycled-content newsprint and one of Canadas leading exporters of market pulp.
In addition to its interest in Ponderay Newsprint, it owns or has a majority interest in 10 other paper mills and sawmills, all in Canada, according to documents released by the company.
Bowater says it expects the acquisition of Avenors holdings to make it the second largest producer of newsprint in the world and the third largest producer of market pulp in North America. If the transaction is approved, Avenor shareholders will be able to choose between receiving cash, common shares of Bowater, or Canadian-listed shares in a new Bowater Canadian subsidiary. Bowater says it plans to fund the cash portion of the transaction committed bank financing and from its own reserves.