Mumbai, India-based Aditya Birla Group has signed an agreement-in-prin- ciple to purchase the assets of Terrace Bay Pulp Mill in North Western Ontario. Kumar Mangalam Birla, Group chairman, said, “The acquisition of the Terrace Bay Mill and its subsequent con- version into a dissolving grade pulp mill is a major strategic move. In the Viscose Staple Fibre (VSF) business, we enjoy global leadership.
“To sustain ongoing growth, we have an integrated business model, spanning the entire value chain from plantation to pulp to fiber. The Terrace Bay Mill, upon conversion, will be geared to provide superior quality pulp for our VSF plants worldwide.”
The mill is owned by Buchanan Forest Products who bought the former Neenah Paper mill in 2006. It was placed under the Canadian Companies Creditors Arrangement Act (CCAA) in January 2012. Aditya Birla will make the acqui- sition through a Special Purpose Vehicle (SPV), AV Terrace Bay Inc. (Canada). Aditya Birla subsidiary Grasim Industries Ltd. proposes to hold a 40% stake in AV Terrace Bay Inc. and the remaining 60% is proposed to be held by Thai Rayon Public Co. Ltd., Thailand. Over the next three years, Grasim would be contribut- ing $44 million out of the total equity contribution of $110 million.
The Group will invest over $250 mil- lion to convert the mill to produce 280,000 tonnes/y of dissolving grade pulp. Until the conversion, which is likely to happen in FY16, the mill will produce and sell paper grade pulp after re-starting by October 2012. The mill is considered an anchor mill due to its location and its significant consumption of residual chips produced by regional sawmills.
The transaction is subject to court approvals in Canada and other regula- tory approvals in Canada, Thailand and India. It was expected to close by 31 July, 2012.
Aditya Birla owns two other Cana- dian pulp operations – AV Nackawic and AV Cell. Other interests include Aditya Birla Novelis (metals), Aditya Birla Minacs (ITES) and Columbian Chemicals (carbon black). There is a 6,000-strong workforce in the country. www.adityabirla.com
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