MADAWASKA, Maine — The majority owner of the Twin Rivers Paper Co. is seeking to sell its stake in the company.
Brookfield Asset Management confirmed Wednesday that it is looking for a buyer for its 51 percent share in Twin Rivers, which employs approximately 1,200 at its paper operations in Madawaska and Edmundston, New Brunswick, and at a sawmill in Plaster Rock, New Brunswick.
Twin Rivers Paper previously was known as Fraser Paper. That company filed for bankruptcy, emerging in April 2010 as Twin Rivers. Brookfield Asset Management, formerly known as Brascan Corp., emerged as majority owner. The New Brunswick government is a general partner and creditors own minority shares in the company, as they exchanged debt for equity as part of the bankruptcy deal.
Dan Whyte, senior vice president at Brookfield, said the business has stabilized out of bankruptcy, has secured customers and suppliers, hammered out a union contract, gotten additional financing and made capital improvements in the Madawaska mill.
“The company, though it’s stable, will need to establish a longer term financing plan for growth. Where do you get that capital? Brookfield Asset Management is not prepared to put any more capital in that company,” said Whyte. “Paper is no longer a core business of ours. We hold 51 percent interest in Twin Rivers and we’re looking to divest that interest to a purchaser who’s prepared to work with the minority shareholders, existing stakeholders and someone who can support the business in a strategic direction.”
Brookfield, said Whyte, is focused on four business platforms: power, properties, infrastructure and finance. Paper is not core to Brookfield’s business, he said.
Whyte said Brookfield has had discussions with several companies interested in the firm’s Twin Rivers share. He wouldn’t name companies nor disclose what sort of money Brookfield is seeking in the deal.
Broadly speaking, he said, a number of different types of companies could be interested in the majority share of Twin Rivers, from other paper companies to investment houses. Ownership in the pulp and paper sector has evolved in recent years away from true paper companies to most mills being owned by investment firms.
Whyte said a buyer potentially could seek to purchase all of Twin Rivers, working out a deal with the other minority shareholders. Whyte said Brookfield has not set a deadline for a sale.
Jeff Dutton, Twin Rivers’ CEO, said the sale shouldn’t affect day-to-day operations at the mill — it’s a sale of ownership stake, not a sale of the hard assets. New ownership is needed, said Dutton, to help with future capital improvements at the mill as it positions itself for future business opportunities.
“Quite honestly, we need an equity owner that’s prepared to finance the business and support the growth of the business with capital resources,” said Dutton. “In the end, it’s good for Brookfield and good for Twin Rivers — we’ll look forward to the process.”
In January, the mill secured a loan guarantee from Business New Brunswick and loan insurance from the Finance Authority of Maine. Canadian Imperial Bank of Commerce, the company’s current lender, also approved an extension and amendments to Twin Rivers Paper’s existing revolving credit facility.
The company made $23 million in “green” energy investments designed to improve the company’s efficiency and lower its energy costs. Workers also developed alkaline-free extraction from pulp that saves on pulp and paper bleaching and energy costs.
“The bankruptcy of Fraser is not that far in our rearview mirror, but I think we’ve come a long way,” said Dutton.
Dutton said the mill was in a “strong position” in its specialty publishing business, producing paper for pharmaceutical inserts and financial printing. The company also is doing well in its greaseproof papers, expanding its customer base to food service and other specialty packaging areas.
Brookfield’s Whyte noted that the company is stable, but “it’s not a big money maker.”
Changes in the industry came fast and furious in recent years, he said. Expansion of broadband Internet to homes, the growth of tablets and readers to replace traditional paper products and other trends have hurt the sector.
“I don’t think any of us could have predicted any of the changes we’ve seen over the last three to four years,” said Dutton.
At this point, the company needs to anticipate the needs of the market rather than react once the markets have changed, he said. Twin Rivers has deep relationships with its customers and has a sense of what’s on the horizon, he said.
Those market changes likely will mean the mill has to update processes, invest in new machines and technology, and that requires capital, he said.
“As we continue to grow, we need to invest to improve our capabilities,” he said.
Is there any future in paper making, at all ?
Yea, if youg get someone that knows what they are doing. They got what they wanted. The water rights from the Great Northern, interesting that this is in the Penobscot section and not the Aroostook section.
probably because Brookfield is in Penobscot County overseeing their kingdom ( aka Brascan, aka….., aka……, aka…..has anyone noticed during all these land/asset removals in the last 10 years that it’s hard enough to keep track of who bought what, let alone they change names faster than the weather changes?)
Maybe that is the problems with LLC’s they can get away with everything and keep their big corporate profits hidden.
Not only that, can anyone explain to me the difference between the pulp and papermaking sectors? My understanding is that the pulp is quite valuable. I think the mill at Lincoln is making mostly pulp. It used to be Lincoln Pulp & Paper and now I think it is just Lincoln Pulp (I used to teach up at Mattanawcook). And some of the old mills in New England are getting by making specialty papers and products.
The pulp is valuable as it is being shipped to China so they can turn it into paper and then sell the paper back to us.
No – It’s now Lincoln Paper & Tissue, making tissue paper successfully for the domestic market, last I heard. The mill in woodland makes pulp exclusively, is owned by a Taiwanese company and ships its product overseas.
Yes. It is currently a thriving business in China. For the sake of the employees, they may want to consider an employee purchase option for the mill. Maybe their union would like to help pony up some of the money for financing, at least they would be getting some good out of all the dues they have paid over the years.
After seeing the Chinese sheetrock that was imported with all sorts of
hazardous chemicals in it, I’d hate to get a paper cut from Chinese
paper. Could prove fatal.
Alternative headline: “Papermill in Madawaska Experiencing Financial Problem…Layoffs Likely.
To be followed within 48 hours with an article about how Penguin and Maine’s Congressional Delegation (or what’s left of it) are headed to the County…..
To be followed by an article about how the Feds are going to establish job re-training programs for the ‘off-set mill-workers’. ….
To be followed by an article about how the Governor wants to buy the toxic dump, associated with the mill, in order to lure another investment group to purchase the mill…..
And the beat goes on…….
Adrianne is going to have to spin up a positive song and dance about economic necrophilia as the wave of the future in penguins Maine.
And, how you continue to spread hate and discontent goes on as well. why do you feel the need to be this way ?
Bangorian is simply reciting what has already happened, and likely will happen again. History repeating itself. This is Wall Street, not your locally-owned business that might care about its employees.
The problem with the people who continue to rely on the paper industry for their living is that they confuse facts for ‘hate and discontent’. Ignore me if you want, but let’s not act surprised when you find out the factory is gone. OK?
My head’s still spinning because there’s been as many “deals” going on the Northern part of the state as the legislature has bills whizzing by, but wasn’t part of the original “deal” when Brookfield, (aka, aka, aka…Brascan) got the hydro system there was originally a requirement that paper mills be tied to their ownership? Seems like they’re managing to get out of that….I think it later became a loophole they could weasel out of….gee what a surprise.
hope brookfield does not have a dump for sale.
Probably, but they already got the hydro system
do they have a dump the governor can buy?
It’s been painfully obvious for quite some time that Brookfield has no talent or interest in operating paper mills. Unfortunately, the state has not been smart enough to prevent them from ruining a couple of good operations (along with countless people’s lives), grabbing invaluable hydro assets for pennies on the dollar, and leaving the state stuck with yet another dump.
“There’s a sucker born every minute” must be enscribed on the walls of the Brookfield board room.
“I don’t think any of us could have predicted any of the changes we’ve seen over the last three to four years,” said Dutton.
Horse hockey … some of us were pointing to the demise of publication papers when Dutton was just a paper machine superintendent at a little coated groundwood mill in Deferiet, NY in the early 90s. Twin Rivers is going through the same slow death spasms that Defereit went through for over 10 years. Fraser and Brookfield both lost serious cash flow in this mill. The same will hold true for any future investor who keeps the mill focused on a similar grade mix. Remote publication mills tucked in a corner at the end of the earth are in a tough spot. Twin Rivers better think long and hard about reinventing themselves.
In principle, you are correct. Publication paper has been dying a slow (now fast) death since the Deferiet days. The reality is that the Madawaska mill has not been a serious contender in that market for many years. Somehow over the years, Fraser had been relatively successful in morphing itself into markets where they could survive until about 2005 or 2006 when the author of your “horse hockey” comment showed up one the scene.
No one should really be surprised. The career history of the “horse hockey” quote hasn’t demonstrated much but devastation and destruction of value. I’m sure he never saw it coming. But he always saw it going.
In all fairness to Dutton, his former boss had as much to do and more in my opinion with the failure of Fraser. Peter Gordon came out of Brookfield to run Fraser with no appreciable knowledge of the pulp and paper industry and was strictly a numbers guy. He had been planted to run finance and he should have been kept there. Clearly, he was not as handy with “numbers” as his board thought him to be. Dutton, to his credit, has always been a sharp papermaker even as ego interfered with sound decision making.
I would like to see the Mad Mills make a go of it as I have a soft spot for old, storied paper mills. The challenge will be to develop a profitable market niche with a new grade mix and find a way to resolve the “end of the world” logistics” problem. I do not believe brown kraft is the solution unless they were to focus entirely on export business and even then they would find themselves in commodity pulp for the most part. We shall see eventually.
I completely agree. But I also believe there was a reason that Gordon brought in who he brought in. Between the two, there was one guy who knew better and one who did not. I can forgive the ignorant one for being ignorant, but not the guy who knew better.
Watch out Mad Town-it seems it is now your turn.
Want a little history about Brookfield?
http://bangor-launch.newspackstaging.com/2010/04/06/news/new-law-gives-katahdin-mills-electric-priority/
2 years ago this month:
“A new state law requires that Brookfield Renewable Energy Inc.’s hydroelectric systems on the Penobscot River keep two Katahdin Paper Co. LLC mills and a proposed public utility as their primary customers, town officials said Tuesday.”
So…the moral to the story is–get rid of the mills & the hydro system is all yours.
Seems funny that these mills can operate for 100 years…. Wall St comes in, rapes the resources, the big boys come in, bleed the mills and when there’s no more left….run to the bank leaving shells of what once was, and toxic dumps behind…..
If you really want to know about the wizzard behind the curtain, check out Sanabe & Associates who proudly display a photo of the Wall St. sign:
Sanabe came to the renewable energy sector through our work with several paper producers. Many paper and wood products companies generate electricity at hydroelectric and cogeneration facilities for internal consumption and/or sale to third parties. Several of these companies have found that separating and monetizing their hydroelectric assets was an attractive way to maximize value. Companies in these sectors are also seeking to leverage their central position in wood fiber markets to participate in biomass electricity and advanced biofuel projects.
http://www.sanabe.com/renewable-energy.aspx
So our misery has lots of company.
Please view the following case studies:
Badger Paper Mills
Bowater/Great Northern Paper
Curtis Papers’ Port Huron Mill
Finch, Pruyn & Company
Longview Fibre
Repap Enterprises
Smurfit-Stone Container (Ad-Hoc Group of Preferred Equity Holders)
St. Laurent Paperboard
For Wall Street speculators, it’s all about the money, Period. No loyalty to local people. Nothing but taking the money out and stranding the workers.
Oh, but, hey this is what Romney’s company Bain did for years. And Romney’s proud of stripping companies of their assets, then closing them down. Great example of capitalism at work, Romney the Romulan (for you Star Trek fans).
Exactly, and the Romney, aka salamander crowd throw out propaganda to their serfs who spend all their time squabbling over memorized mantras while the Wall St boys are running away with the store…then when it crashes everyone forgets what really happened an blames it on the other party…..
Brookfield as a company, and the executives that run it are scum, and are lower than Enron, they nearly destroyed the Millinocket area and they will do the same in Madawaska.
Its really to sad that a certain congressman sides with Brookfield,,, I wonder why..?
It was never about making paper, just making money by quick “turn arounds” and to heck with the towns and families it destroys in it’s wake.
CASE STUDY: BOWATER / GREAT NORTHERN PAPER
Sanabe personnel developed the plan that enabled Bowater to sell the assets of Great Northern Paper for 50% more than the Company
expected.
Great Northern Paper (“GNP”) operated two newsprint and groundwood mills in Northern Maine and controlled approximately 2 million acres
of timberlands in the state. Bowater had acquired the Company in 1993 with a thought to rebuild and expand the newsprint and groundwood
operations on the site. Absent any modernization, the mills were antiquated and inefficient.
Bowater retained Sanabe personnel to sell the Company at a maximum valuation. We quickly decided that the key to value was to separate
the paper mills from the timberland and to market them separately. We divided the timberlands into three properties; two we sold to outside
timber funds. The third property we kept with the paper mills to provide a bankable asset.
http://www.sanabe.com/docs/Bowater-Case-Study.pdf
Every significant player in the pulp and paper industry began monetizing timberland assets over 20 years ago. There is nothing wrong with that. Having ownership of all the land doesn’t have much to do sourcing a wood supply. That can be accomplished with long term contracts.
I guess it depends on how you look at it. Back when GNP had the full ownership things were done entirely differently because they had a vested interest in feeding the mills. It was their equipment along with independent log trucks so if they didn’t take care of the roads it cost them in repairs. They had long term plans for where the cutting would be and the roads were built 2 years in advance. They were well built and were easy on the equipment.
Today, whoever owns the land seems to be in it for the money and that’s what guides the goals for the foresters. The roads are often built with whatever is in the area–believe it or not sometimes blow downs are dropped in with broken slate on top & the grader is just leaving when the first truck comes in. Can you imagine what that does to the equipment and the tires? They don’t care about the roads but they’re so poorly built that they have to be shut down almost every time it rains because they can’t withstand anything. Therefore, you can’t work a full week on a rainy season. The work year has been reduced for what reasons I’m not sure.
Today’s landowners don’t seem to care about anything but the money. The conditions are horrendous, why should they care about what it does to equipment, they’re just harvesting wood. The rates to the trucks haven’t gone up in a generation when fuel was 89 cents/gallon not $4.30/gallon.
So long term contracts may be ok for the landowner and for the mill but the guy in the middle that does all the work–be damned.