The sale of Domtar’s personal care business will allow the forestry company to refocus its efforts on strengthening its paper, pulp and packaging portfolio, according to the firm.
On Jan. 8, Domtar announced the sale of its personal care stream of business to American Industrial Partners (AIP) for $920 million.
Proceeds from the sale will be used to pay down debt to the tune of $600 million and repurchase about $300 million worth of company shares.
The move is part of a long-term plan to create shareholder value in becoming an “industry-leading paper, pulp and packaging company,” Domtar said in a news release.
“This transaction represents a milestone in Domtar’s ongoing portfolio transformation and further advances our strategic initiatives that will position Domtar for a sustainable and successful future,” John D. Williams, Domtar’s president and chief executive officer, said in the release.
Under its personal care line, Domtar manufactures the Attends brand of adult incontinence products and Comfees diapers at manufacturing facilities in North Carolina, Ohio, Spain, and Sweden.
The sale to AIP is expected to be complete by the end of March.
Meanwhile, conversion is ongoing of Domtar’s Kingsport, Tennessee, paper mill to a containerboard plant. Construction is expected to get fully underway in the second quarter of 2021.
Once fully operational, the company said, the facility will have the capacity to produce 600,000 tons of high-quality recycled linerboard and corrugated medium by the end of 2022.
Domtar said it expects paper to remain a “reliable and highly cash-generative business in the coming years,” while in pulp, the company will focus on areas poised for growth, including the hygiene, tissue and towel markets.
Domtar is headquartered in Fort Mill, South Carolina. Its Northern Ontario operations include a pulp mill in Dryden and a pulp, paper, and biomaterials plant in Espanola.