ND Paper LLC ("ND Paper"), a wholly-owned subsidiary of Nine Dragons Paper (Holdings) Limited (the "Company" or "Nine Dragons"), announced that it has entered into a definitive asset purchase agreement (the "Agreement") with OTM Holdings, LLC (the "Seller"), a subsidiary of CVG, Inc, pursuant to which ND Paper will acquire the Seller's bleached kraft pulp mill, plus approximately 100 acres of real property, located in Old Town, Maine (the "Old Town Mill" or the "Mill") for an undisclosed sum, payable in cash.
Prior to its idling in the fourth quarter of 2015, the Old Town Mill was engaged in the business of manufacturing and distributing approximately 155,000 air dried metric tonnes (admt) annually of bleached hardwood kraft pulp.
Under ND Paper ownership, the Mill will be reconfigured to operate at substantially lower manufacturing costs compared to the predecessor company, achieved by three primary tactics.
First, with abundant local availability of softwood, ND Paper intends to move the production mix from hardwood kraft to softwood kraft pulp.
Second, by eliminating bleaching operations and focusing on unbleached softwood pulp, the Mill will increase its production rates and lower variable input costs.
Finally, the mill will share several management and administrative functions with ND Paper's Rumford Division, lowering overall overhead costs.
After a series of phased capital investments, ND Paper expects the Mill will restart in the first quarter of 2019 and ultimately produce 275,000 admt annually of unbleached kraft pulp.
"We are absolutely thrilled to restart the Old Town Mill and return well over 100 high-paying jobs to Penobscot County," said Ken Liu, CEO of ND Paper. "By leveraging our existing manufacturing platform in Maine, combined with the financial capacity to wisely invest in the mill's production capabilities, we expect to create a very strong future for this facility. Also, similar to our other recent acquisition announcement in West Virginia, this transaction supports Nine Dragons' company-wide fiber sourcing requirements and global growth initiatives."
"We always knew Old Town was a tremendous asset and would eventually reopen," said Governor Paul R. LePage. "I want to congratulate ND Paper for showing the confidence and vision to get it back up and running. This is just the latest example of new investment and career opportunities throughout our forest products industry. It's a trend we expect will continue as we work with various investors and projects in areas such as biofuels, cross laminated timber and pellets."
OTM Holdings, LLC. originally purchased the Old Town Mill properties with intentions of keeping the site viable in the forest products industry. "We see this investment as further proof that the pulp and paper industry is positively adjusting to market changes and is very much alive and well in Maine", said Jean Carrier, President of CVG, Inc. "One way or another, it has been our goal to protect the Old Town Mill site and see that it thrives into the future. There are many very talented and hardworking people in the forest products industry who will help make this a tremendous long term success and we are excited to see ND Paper growing at this site".
Mayor David Mahan agreed, saying, "we promised the people of Old Town that something great would be coming at the Mill site. Over the last few years we've worked closely with Bill Firestone from MFGR, and over the last several months with Jean Carrier of CVG, Inc towards my goal of bringing jobs back to Old Town. Thank you all, but a special thanks to ND Paper for investing in our city. Welcome to Old Town!!"
ND Paper expects to complete this transaction in the next thirty days, subject to customary closing conditions and approvals.