York, Pennsylvania, USA 27 August 2018 -- (From news reports) -- The investment firm buying Glatfelter's specialty papers division says it plans to invest in the division and make it more competitive.
In a deal announced earlier this week, the firm, Lindsay Goldberg LLC, is paying $320 million in cash for Glatfelter's specialty papers division, its largest but also least profitable operating unit. Lindsay Goldberg is also assuming about $40 million in health care costs for Glatfelter retirees.
The specialty papers division includes plants in Spring Grove, Chillicothe, Ohio, and Fremont, Ohio, as well as woodyard operations in Maryland, Ohio and West Virginia. Abbreviated as SPBU, the division makes paper for printers, envelopes, playing cards, books and other applications.
In a press release, Lindsay Goldberg indicated that the firm planned to revitalize the unit with assistance from executives with paper-industry experience.
"We are energized by the opportunity to work with the talented team at SPBU and look forward to working with management and union members to enhance the competitiveness of these mills," Steve Klinger, who heads a related company in Lindsay Goldberg's portfolio, Crown Paper Group Inc., said in a statement. "During the evaluation process we identified multiple opportunities for the investment of capital in the mills, designed to increase efficiency and productivity. We are proud of our track record of engaging employees, embracing safe work practices, minimizing our environmental footprint, partnering with communities in which we operate, and building high performance paper businesses that exceed customer expectations."
Klinger is expected to be involved in the investments, according to a press release from Lindsay Goldberg, as is Steve Strickland, an executive at one of the firm's other companies, Golden West Packaging Group.
Glatfelter said in February it was exploring a potential sale or other option for its specialty papers business. The unit brings in the most revenue for the company, but its operating margins are lower than those for the manufacturer's other two divisions: composite fibers, used in food-related products; and airlaid materials, whose markets include health care.
Sales for specialty papers were $190 million for the three months, ending June 30, according to a filing with the U.S. Securities and Exchange Commission. The unit had an operating loss of $20.9 million for the quarter.
In comparison, composite fibers had sales of $142.9 million and operating income of $13.2 million for the quarter. Airlaid materials had sales of $72.8 million and operating income of $7.6 million.
In its filing, Glatfelter attributed the weaker performance at specialty papers to several factors, including higher prices for energy, raw materials and maintenance.
As of February, Glatfelter's specialty papers unit employed 1,795 of the 4,200 people the company employed worldwide. The Spring Grove plant had 750 workers at that time, according to Business Journal records. Last summer Glatfelter laid off 70 employees from its specialty papers unit including 30 in Spring Grove.
The deal between Glatfelter and Lindsay Goldberg is expected to close during the fourth quarter of 2018, subject to satisfaction of customary closing conditions, including regulatory approvals.
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