Fortress Paper agrees to acquire Thurso mill from Fraser Papers

Fortress Paper has signed an agreement to purchase the Thurso northern bleached hardwood kraft mill from Fraser Papers.

Fortress Paper plans to convert the operation into a world class, low cost, specialty cellulose (dissolving pulp) operation. The company also to build a biomass-based cogeneration plant at the Thurso Mill which will produce green electricity resulting in material net energy savings (income).

Fortress Specialty Cellulose Inc., a wholly-owned subsidiary, will spend $153 million to convert the mill. The specialty cellulose mill is planned to have an annual production capacity of more than 200,000 air dried metric tonnes and is expected to be completed in mid-2011.

The company plans to produce dissolving grade cellulose for the textile industry.

The cogeneration facility will be capable of 25 megawatts and should be in operation by the fourth quarter of 2012.

Conditions of the sale include:

• $3 million purchase price


• because Fraser Papers is under creditor protection, the sale must be approved by the Ontario Superior Court of Justice


• Fortress Paper agrees to renew collective agreements with all unionized employees of the Thurso Mill


• Fortress must securing financing to implement their proposed business plan for the mill

Included in the assets being purchased from Fraser is approximately $9.9 million in credits (black liquor credits) granted under the Canadian government's Pulp and Paper Green Transformation Program.

Investissement Quebec has committed, by way of an agreement in principle, to grant Fortress Specialty a loan in the amount of up to $102.4 million to support Fortress Paper's proposed business plan in respect of the Thurso Mill.

The closing of the acquisition is anticipated to occur on or about April 30, 2010.

More information: http://www.fortress.presenternet.com/