Kingsey Falls, Québec, Canada, 27 June 2011 – Cascades Inc. (TSX: CAS), a leader in the recovery of recyclable materials and the production of green packaging and tissue paper products, announces that its Norampac division will invest in Greenpac Mill LLC (Greenpac), a corporation created with the Caisse de dépôt et placement du Québec (the Caisse), Jamestown Container, and one other industry partner, to build and operate a containerboard mill in New York, USA.
The Greenpac mill will be constructed for a total cost of USD 430 million on property located adjacent to an existing Norampac facility in Niagara Falls, New York. Greenpac will manufacture a lightweight linerboard, made with 100% recycled fibers, on a single machine having a width of 328 inches (8.33 meters), with an annual production capacity of 540,000 short tons. This machine will be one of the largest of its kind in North America.
"The investment that we are announcing today is the result of the combined efforts of Cascades and its partners, and is consistent with our development strategy, which aims to position the company amongst the leaders in terms of productivity and profitability in the packaging and tissue sectors," declared Alain Lemaire, president and chief executive officer of Cascades. "As we have stated in the past, we strongly believe that Cascades' future success will be dependent on our ability to offer high performance innovative products which will better meet the needs of our customers, at a cost that will be amongst the lowest in the industry,” he said.
“Moreover, the innovative structure of this partnership will allow us to reach this objective while maintaining the financial flexibility achieved through recent divestitures,” Lemaire said. “We are also confident in regards to industry's mid- and long-term perspectives, and we strongly believe that Greenpac will contribute positively to our net profitability once full ramp-up is achieved."
The Greenpac mill will include numerous technological advances, making it a unique project of its kind in North America. "In particular, the linerboard that will be produced on the new machine will be able to achieve optimal strength while maintaining a low basis weight thereby allowing our customers to better respond to the growing trend towards lightweight packaging," said
Marc-André Dépin, president and chief executive officer of Norampac.
The building and machinery will be designed for optimal energy efficiency and many operations will be automated. Process water will be treated and reused to reduce consumption as much as possible, and the management system for recycled fibers will have a positive effect on the environmental performance of the mill.
The paper machine will be manufactured by Metso, Voith will provide the stock preparation equipment and anaerobic effluent treatment plant, and Siemens will provide the power and control technology.
Fibre supply will be carried out by Cascades and its recovery operations. Sources of old corrugated containers (OCC) are numerous and significant in the region where the mill will be built, which will enable Greenpac's raw material procurement. Customers already have been secured for more than 80% (435,000 short tons) of production, Norampac converting operations will purchase 170,000 short tons (39%) of this production.
The USD 430 million cost of the project will be financed by a USD 140 million equity investment in Greenpac, of which USD 83.6 million (59.7%) will be invested by Cascades, USD 28.3 million (20.2%) will be invested by the Caisse, and USD 28.1 million (20.1%) will be invested by Jamestown Container and another industry partner. The remainder of the financing will be in the form of debt, including senior debt in the amount of USD 228.9 million, which was led by GE Capital, and subordinated debt in the amount of USD 61 million. Senior debt will be provided by an international banking syndicate managed by GE Capital. The subordinated debt will be provided by the Caisse (USD 45.75 million) and Cascades (USD 15.25 million), and will serve to bridge expected refundable tax credits. Greenpac's debt will be without recourse to Cascades and will have a 10-year maturity. Norampac will assume responsibility for managing day-to-day operations of Greenpac.
Greenpac's results will be included in the share of results of associates and joint ventures in Cascades' statements of earnings.
Construction of the mill will create 108 new jobs in New York and contribute to the economic development of the region.
MiniMill Technologies, Inc. (MMT) has been retained to support Norampac and partners in the project management. The MMT team includes experienced employees who worked on many significant projects whose total costs amount to almost USD 3 billion. The construction will begin in July 2011 and the start-up is planned for the summer of 2013.
Founded in 1964, Cascades produces, converts, and markets packaging and tissue products that are composed mainly of recycled fibers. The company employs more than 11,000 employees, who work in more than 100 units located in North America and Europe. Its management philosophy, its more than 45 years of experience in recycling, and its continued efforts in research and development are strengths that enable Cascades to create new products for its customers. Cascades' shares trade on the Toronto Stock Exchange, under the ticker symbol CAS.