By KELLY LOUISEIZE
At least a “handful” of groups have expressed interest in the Cascades Fine Papers Group Thunder Bay plant, the city’s senior development officer says.
“I can tell you that there are a few groups that are interested in the operation,” says Richard Pohler. “They are at the early stage of their due diligence.”
The manufacturer of coated fine papers, including specialty fine papers announced the plant closure for Jan. 21, citing high energy and wood costs as well as poor market conditions. The decision has put 275 people out of work.
The potential investors are determining whether there is an opportunity to salvage the facility and run it as a pulp and paper operation with low energy consumption. Modifying the product line and examining “additional capital investments” are being discussed as part of the due diligence process.
“The key is to add as much value as possible to get into that specialty market area,” he says.
The more refining done to a two-by-four, the more value that can be extracted from it. What is interesting about this property is that it is a fine paper mill as opposed to a newsprint mill. The overall fine paper market is still growing at approximately two per cent per year, while newsprint manufacturers have experienced a six per cent decrease in their market, Pohler says.
So, as far as he is concerned, there is still room to jump into the specialty market.
The prospective buyers have spoken with Cascades about the plant as a matter of interest. The company is welcoming the prospective buyers to the table. Hubert Bolduc, Cascades’s vice-president of communications, says they have made contact with a potential buyer, but negotiations will not take place until the groups come to the table with financial reinforcements.
Before that happens, environmental, engineering, marketing, labour and financial issues pertaining to the plant will need to be examined. That could take several months, Pohler says.
Some of the members would like to finish it sooner. Each potential buyer has a proven track record of investment in the region. One or more of the parties may work in unison with each other through the due diligence process to obtain the appropriate information. Pohler says some have a great deal of experience in the forestry sector.
The prospective buyers have already voiced their concerns over the high costs associated with energy use and wood supply.
