NewPage Acquires Stora Enso's North American Mills

By: Meg Campbell and Jim Rosenberg Coated paper manufacturer NewPage Corp., Miamisburg, Ohio, has completed its acquisition of the eight North American paper manufacturing operations of Stora Enso Oyj, including the newsprint machine that the Finnish paper company operated in Port Hawkesbury, Nova Scotia.

The acquisition was completed with $2.556 billion in financing arranged by Goldman Sachs. Led by Mark A. Suwyn, chairman and CEO, NewPage is owned by Cerberus Capital Management, one of the largest private equity companies in New York. Suwyn was chairman and CEO of Louisiana-Pacific Holding before joining NewPage in 2005 and chairman and CEO of Louisiana-Pacific Corp. from 1996 until his retirement in 2004.

NewPage is believed to be North America's biggest maker of coated paper. Though "not part of our main product mix ... we still do obviously make newsprint," NewPage spokeswoman Amber Garwood said, adding that customers were informed today that the company was raising the price of its newsprint by $100 per ton.

The Port Hawkesbury mill, which has been operating since 1962, currently has 550 employees and produces 360,000 tons a year of coated magazine paper on one machine, and 190,000 tons of newsprint on a second, older machine.

"Stora officials have said the mill has lost money for most of the past decade," the Cape Breton Post reported last month. The Sydney, Nova Scotia, daily also noted that the mill was idled for most of 2006, "initially due to a labour dispute and later by Stora's pursuit of a new power-rate structure." Stora eventually won contract concessions from employees and fiber suppliers.

"With most of raw material, labour and other cost of sales ... in Canadian dollars but most product going to the United States, a stronger Canadian dollar increases the mill's costs of sales," Post reporter Nancy King wrote.

Stora Enso Oyj was the only European paper producer remaining in North America after Norske Skog divested its Canadian holdings in 2006. A few years earlier, Cerberus had been the disgruntled investor in the Pacifica-Norske Skog deal and lawsuit (see E&P Jun 04, 2001), and was also involved in the debt-to-equity deal done by legacy systems developer SII about 10 years ago.