Tembec Secures New Funding for Temiscaming Specialty Cellulose Project
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Tembec, Montreal, Qué., Canada, this week announced that it has secured additional financing in the amount of $27.8 million to fund a portion of the Temiscaming, Qué., specialty cellulose cogeneration project. In particular, Tembec has entered into an additional loan in the amount of $17.8 million with Investissement Québec (IQ) and has entered into an amended and restated credit agreement with Integrated Private Debt Fund III LP (IPD), as agent for the project's senior lenders, increasing its credit facility by $10 million (IPD loan).
This additional $27.8 million in loans increases the total project financing to $132.8 million, with IQ now committed to $92.8 million of the financing and IPD committed to $40 million. Both the IQ loan and the IPD loan remain subject to the satisfaction of certain customary closing conditions, including the granting of new security for the loans.
To the end of August 2013, Tembec has spent $131 million on the project, which has a total estimated cost of $235 million. The company has used a total of $48 million of the previously noted $133 million of project financing. Of the remaining $104 million to be spent, $85 million will be funded by the remaining project financing and $29 million from the company's internally generated cash flow.
The project involves the replacement of three low-pressure boilers with a single new high-pressure boiler designed to burn waste sulfite liquor generated by the specialty cellulose manufacturing process. The project also includes the installation of a new 50-MW electrical turbine.
Completion of the boiler portion of the project is scheduled for April 2014 and startup of the turbine should occur in September 2014. The company anticipates that the project will improve annual adjusted EBITDA by approximately $48 million. The improvement will include approximately $28 million of incremental electricity revenues, $7 million of operating and maintenance cost reduction, and $13 million of productivity and margin enhancements associated with an annual production increase of 15,000 metric tons of specialty cellulose pulp.
Tembec is a producer of forest products--pulp, paper, specialty cellulose, and wood products. Its principal operations are in Canada and France, and the company has some 3,400 employees and annual sales of approximately $2 billion.
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