Fortress Paper Ltd., Vancouver, B.C., Canada, this week announced that its wholly owned subsidiaries, Fortress Global Cellulose Ltd. and Fortress Lumber Corp. have successfully closed the asset purchase agreement (APA) entered into with LSQ Energy L.P. and LSQ Development L.P. (Purchaser), previously announced on June 23, 2016. 

The APA provides for the sale of all of the assets relating to the non-operating pulp mill and sawmill, as well as the cogeneration facility, located in Lebel-sur-Quévillon, Québec. Pursuant to the closing of the APA, the trust agreement among BMO Trust Co., 9109-3294 Québec Inc. (9109), Domtar Inc., and Fortress Global dated June 13, 2012 (Trust Agreement) was amended, and the Purchaser assumed $7.5 million of the Vendor's liabilities thereunder, which amount has been paid to the trustee pursuant to the amended Trust Agreement and to 9109 in repayment of amounts previously paid into the trust. 

The Company also obtained the release of the letters of credit in the aggregate amount of $1.125 million which had been previously deposited with Hydro Québec Distribution in connection with an electricity supply contract.

Concurrent with the closing, the ccmpany assigned and transferred a $7.0 million note received from the Purchaser to Investissement Québec (IQ), acting on behalf of the Québec Government, as early repayment of the principal amounts due in 2017 pursuant to the terms of the indebtedness owed to IQ by Fortress Specialty Cellulose Inc. (FSC). 

In addition, as consideration for the early repayment of principal and the guarantee of the note provided by FSC, IQ agreed to defer an aggregate amount of $6.3 million of quarterly principal payments otherwise payable on Sept. 30, 2017, Dec. 31, 2017, and March 31, 2018, without penalty or interest accruing on such amounts for one year. The remaining principal amount will be amortized in equal quarterly installments commencing June 30, 2018, over the remaining term of the loan.