Changing Hands

Several news reports over the past few months rekindled memories of mills I’ve visited, including Snowflake in Arizona, SP Newsprint in Georgia, and Port Hawkesbury in Nova Scotia. Each mill has recently been acquired by new owners.

The Snowflake mill was started on 1963. Stone Container Corporation bought it in 1987 and sold it to Abitibi Consolidated in 1998, along with a shortline railroad. I visited the newsprint mill in 1999, as it was completing projects to convert to 100% recycling.

Abitibi Consolidated’s recently proposed merger with Bowater raised antitrust concerns at the U.S. Department of Justice. To avoid a civil lawsuit, Abitibi Consolidated would have to sell the Snowflake mill. An agreement was announced little more than a week ago by which another Canadian-based company, Catalyst Paper Corporation, would acquire the mill for USD 161 million cash.

SP Newsprint began producing newsprint at the Dublin mill in 1979. The company has been owned equally by three newspaper publishing companies – Media General, Knight Ridder (acquired by The McClatchy Company in 2006), and Cox Enterprises – since 1977. It includes newsprint mills in Dublin, Georgia, and Newberg, Oregon, and recycling operations serving those mills. In 1994, about 25% of the newsprint produced by the company was sold to the partners; the rest was sold on the market.

I visited the mill in 1999 as part of a special project to take photographs of SP Newsprint employees at work.

SP Newsprint is in the process of being sold to Connecticut-based White Birch Paper Company, the second largest newsprint producer in North America, for USD 350 million cash. McClatchy is using its proceeds from the sale to pay down debt, much of which is associated with the Knight Ridder acquisition. Media General will also use the proceeds for debt repayment.

Stora decided to build a pulp mill at Port Hawkesbury in 1957 and began making newsprint there in 1971. It began producing high-grade supercalendered paper in 1998.

I visited the Port Hawkesbury mill that year, along with many other journalists and invited guests for the inauguration of the largest supercalender paper machine at that time. Shortly afterward, Stora and Enso announced they would be merging.

More recently, a labor dispute and profitability issues halted operations at the Port Hawkesbury mill for 10 months, beginning Christmas Eve in 2005. The stronger Canadian dollar has also challenged profitability for the mill, which nearly exclusively serves the North American market.

In December 2007, NewPage Corporation took ownership of Stora Enso’s North American paper manufacturing operations, including Port Hawkesbury and seven other publication, fine, and specialty paper mills in the United States and Canada. Along with helping to finance a portion of the USD 2.5 billion deal, Stora Enso will hold nearly 20% equity interest in NewPage. Stora Enso’s stated goal for the transaction is to improve long-term earnings.

Many and differing factors have resulted in each of these mills changing hands, even though all three are good, if not excellent mills. Regulatory constraints, currency fluctuations, shifting advertising markets, opportunities to expand in other parts of the world, and shifting management objectives, are a few of the challenges that have affected these mills and their owners.