VANCOUVER, B.C. - Fortress Paper Ltd. has signed an agreement to acquire a manufacturing facility in Thurso, Que., from insolvent Fraser Papers Inc. for $3 million.
Vancouver-based Fortress (TSX:FTP), which produces specialty paper, said it intends to spend approximately $153 million to convert the plant into a specialty cellulose operation once the acquisition is complete. The company said it has pre-arranged financing to fund the project.
The mill is expected to produce more than 200,000 metric tonnes annually once the conversion is completed in mid-2011, Fortress said.
The company said it also intends to build a biomass-based cogeneration plant at the mill, which will provide green electricity resulting in net energy savings.
"Once the conversion and cogeneration projects are complete, we will be entering a new product segment which offers long-term growth prospects and attractive margins," stated Fortress CEO Chad Wasilenkoff.
Fortress said it hopes to complete the arrangement by April 30.
Fraser Papers has been operating under creditor protection and has agreed to sell its speciality paper business as well as two New Brunswick lumber mills to a new company that will be 51 per cent owned by Brookfield Asset Management Inc. (TSX:BAM.A).
Fortress makes wallpaper and paper for money, passport and visa papers.
Shares in Fortress, which made the announcement after markets closed, lost 10 cents to $14.70 in Thursday trading on the Toronto Stock Exchange.