WISCONSINREPORT.COM (12/26/07) - NewPage Corporation has completed the previously-announced acquisition of Stora Enso Oyj's (NYSE: SEO) North American paper manufacturing operations. The acquisition includes mills at the Central Wisconsin communities of Wisconsin Rapids, Biron, Whiting and Stevens Point. Combined, the new operating company, which will be called NewPage Corporation, will be the North American industry leader in publication, fine and specialty paper. NewPage Corporation, headquartered in Miamisburg, Ohio, is a leading U.S. producer of coated papers in North America.
"We are delighted with the great co-operation between the NewPage and Stora Enso North America teams - as well as Stora Enso and Cerberus - in the very timely closing process," said Stora Enso CEO Jouko Karvinen.
"We believe this is a sign of a build-up of a true winning team in North America, which is important for Stora Enso as a minority shareholder," the Stora Enso CEO said.
With more than 4,300 employees, NewPage operates integrated pulp and paper manufacturing mills located in Escanaba, Michigan; Luke, Maryland; Rumford, Maine; and Wickliffe, Kentucky; and a converting and distribution center in Chillicothe, Ohio. The mills have a combined annual capacity of approximately 2.2 million tons of coated paper.
The Stora Enso North America business moving to NewPage will include the Stora Enso papermaking operations in Biron, Kimberly, Niagara, Stevens Point, Whiting and Wisconsin Rapids, Wisconsin; Duluth, Minnesota; and Port Hawkesbury, Nova Scotia, Canada.
Stora Enso North America is a leading producer of coated and supercalendered papers, and a premier producer of specialty papers. Other products include newsprint, elemental chlorine-free kraft pulp, totally chlorine-free mechanical pulp and recycled pulp from recovered paper. The company produces 3.0 million tons of paper annually and had revenues of $2.3 billion with about 4,350 employees in 2006.
“NewPage, majority owned by Cerberus Capital Management, completed the $2.556 billion financing arranged by Goldman Sachs in one of the most difficult credit markets in memory,” said Mark A. Suwyn, NewPage Chairman and Chief Executive Officer.
“This speaks well of the soundness of the business combination, the quality of the management team, and the strength of the support we've received from Cerberus and Goldman Sachs," the New Page chairman says.
"This news is very exciting for the business. We've achieved regulatory approvals and other milestones more quickly than anticipated, and therefore were able to close ahead of schedule,” Chairman Suwyn said.
The combined product portfolio is the broadest in North America. The new organization will have approximately $4.3 billion in pro forma net sales for the last twelve months ended September 30, 2007, and exceptional platforms in the company's core businesses including coated freesheet, coated groundwood, supercalendered and specialty papers. These papers are used for corporate collateral, high-end advertising brochures, magazines, catalogs, books, coupons, inserts, packaging applications and direct mail advertising.
“We have an excellent senior leadership team in place and are creating new opportunities for our employees to grow and succeed. We know there are many challenges ahead of us, but we believe we're well positioned for success and look forward to making the company prosper and grow,” said Richard D. Willett, President and Chief Operating Officer of NewPage.
“With this combination and the powerful businesses it creates, NewPage has improved its ability to meet the needs of its customers with the high quality customer service and products they've come to expect from both companies. This should also enable us to deliver higher returns on investment and meet our return on capital goal. Our plan to achieve $265 million in annualized cost synergies is just the first step toward that goal,” Willet said.
NewPage operates 12 paper mills with 26 paper machines located in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. These mills have a total annual production capacity of approximately 5.5 million tons of paper, which includes 4.3 million tons of coated paper, 920,000 tons of uncoated paper, 300,000 tons of specialty paper, as well as 3.2 million tons of pulp. NewPage is now the largest manufacturer of coated paper in North America, based on capacity.
Goldman, Sachs & Co. acted as exclusive financial advisor to NewPage Corporation and Goldman Sachs and its affiliates acted as sole lead arranger and sole bookrunner on the financing. Schulte Roth & Zabel LLP acted as legal advisor to NewPage Corporation.
As a result of the transaction, affiliates of Cerberus Capital Management, L.P., and certain members of NewPage management own, in the aggregate, 80.1% of the outstanding capital stock of NewPage Group Inc., the indirect parent entity of NewPage Corporation. Stora Enso Oyj owns the remaining 19.9% of outstanding capital stock.
About NewPage Corporation
Headquartered in Miamisburg, Ohio, NewPage Corporation is the largest printing paper manufacturer in North America, based on production capacity with more than $4.3 billion in pro forma net sales for the last twelve months ended September 30, 2007.
The company's product portfolio is the broadest in North America and includes coated freesheet, coated groundwood, supercalendered and specialty papers. These papers are used for corporate collateral, high-end advertising brochures, magazines, catalogs, books, coupons, inserts, packaging applications and direct mail advertising.
NewPage owns a total of 12 paper mills operating 26 paper machines located in Kentucky, Maine, Maryland, Michigan, Minnesota, Nova Scotia, and Wisconsin. These mills have a total annual production capacity of approximately 5.5 million tons of paper, including 4.3 million tons of coated paper, 920,000 tons of uncoated paper and 300,000 tons of specialty paper, as well as approximately 3.2 million tons of pulp.
Established in 1992, Cerberus Capital Management, L.P., along with its affiliates, is one of the world's leading private investment firms with approximately $26 billion under management in funds and accounts. Through its team of more than 275 investment and operations professionals, Cerberus specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and value creation.
Cerberus is headquartered in New York City, with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Beijing, Tokyo, Osaka and Taipei.
The transaction will generate a Stora Enso loss of approximately EUR 37 million in the fourth quarter of 2007 based on the balance sheet as of the end November 2007 and is therefore subject to fair valuation of pension assets and other final closing adjustments. The final financial effects of this transaction on Stora Enso will be disclosed on 13 February 2008 when Stora Enso's full year results for 2007 are released.
As part of the transaction, Stora Enso will divest eight publication paper, fine paper and speciality paper mills, which will reduce the Group's annual production capacity and the number of personnel by about 4 350, according to Stora Enso.
Stora Enso will retain Corenso's North American operations. Corenso produces cores and coreboard for industrial use in various fields of business.