Catalyst Paper Corp., Richmond, B.C., Canada, this past Wednesday reported that an important milestone has been achieved in the previously announced acquisition by Catalyst of the Biron paper mill in Wisconsin and the Rumford pulp and paper mill in Maine, USA, from NewPage Corp., NewPage Wisconsin System Inc., and Rumford Paper Co. The transaction, valued at approximately $1.4 billion, originally was announced on Jan. 6, 2014. 

 

The step forward was made possible by a U.S. Department of Justice announcement that it had filed a Proposed Final Judgment and a Hold Separate Stipulation and Order with the U.S. District Court for the District of Columbia, embodying a consent settlement in connection with the proposed acquisition by Verso Paper Corp. of NewPage Holdings Inc. As part of the settlement process, the U.S. civil antitrust lawsuit alleges that Verso’s proposed acquisition of NewPage would violate the antitrust laws. At the same time, the U.S. proposed settlement, if approved by the court, will resolve the lawsuit and enable the transaction to proceed. Subject to the Verso transaction being completed and certain other closing conditions being met, Catalyst will be able to proceed with the acquisition and anticipates a closing date on or about January 7 (next Wednesday).

 

The proposed settlement requires the divestiture of NewPage's paper mills in Biron, Wis. and Rumford, Maine, to a subsidiary of Catalyst Paper, as previously announced on Oct. 30, 2014. The proposed settlement will be published in the Federal Register and will be subject to public comment, as required by the Antitrust Procedures and Penalties Act (known as the Tunney Act). 

 

"This Acquisition enhances our long-term competitiveness and is expected to make Catalyst a stronger company more effectively positioned for the future," said Joe Nemeth, president and CEO. "With the addition of the Biron and Rumford mills, Catalyst will be able to offer its new and existing customers a more diversified and higher-value product suite, complemented by our commitment to quality service focused on understanding and meeting our customers' needs."

 

As previously disclosed, Catalyst anticipates that the $50 million increase in the maximum amount of credit available under Catalyst's asset-based credit facility and the $25 million (principal amount) offering of additional PIK toggle senior secured notes will close concurrently with the acquisition, subject to satisfaction of certain closing conditions, including the approval of the Toronto Stock Exchange in case of the offering. 

 

Catalyst produces specialty mechanical printing papers, newsprint, and pulp. Its customers include retailers, publishers, and commercial printers in North America, Latin America, the Pacific Rim, and Europe. With three mills in British Columbia, Catalyst has an annual production capacity of 1.5 million metric tons.