Toronto's Fraser Papers to buy Katahdin

Toronto's Fraser Papers to buy Katahdin

	Published : Wed, 31 Jan 2007 23:34 By : Agencies Print this Story

EAST MILLINOCKET, Maine (AFX) - Workers hope Fraser Papers Co. will invest in capital improvements in two Katahdin Paper Co. mills after completing its purchase of the mills from the company that brought them out of bankruptcy.

Fraser already has been operating the mills owned by Brookfield Asset Management Inc. The transaction, to be completed in the second quarter, would give Fraser Papers outright ownership of the mills in Millinocket and East Millinocket.

Since Fraser already runs the mills, workers should see little change once the transaction closes, Fraser President Peter Gordon said Wednesday.

'I don't think people should expect at the mill to see much more change at all,' Gordon said from the company headquarters in Toronto.

Brookfield, which was known as Brascan Corp. when it took over the mills, never intended to operate them indefinitely and the deal with Fraser had been in the works for months. Thus Tuesday's announcement came as no surprise to workers.

The company began the formal process of notifying the 600 mill workers on Wednesday, said Glenn Saucier, human resources manager.

Jimmy Busque, who works in the Millinocket mill and serves on the Millinocket Town Council, said workers are happy and hopeful.

'I'm just optimistic and hopeful that there'll be any type of modernization. That's what everyone is hoping for,' Busque added.

Millinocket Town Manager Eugene Conlogue said he, too, hopes there will be investments to keep the mills modern.

'We want that company to be profitable. We are very much on board with this stock purchase and we wish them the best,' Conlogue said.

Under the agreement, Fraser will pay $50 million plus working capital of about $30 million for the East Millinocket mill, and it will make royalty payments based on the performance of the paper product line from the Millinocket mill.

The transaction boosts Fraser's stake in the Katahdin Paper Co. mills from 10 percent to 100 percent. Brookfield, for its part, remains a minority owner of Fraser.

The East Millinocket mill, which has 450 workers, produces telephone and business directory paper while the Millinocket mill, which has 150 workers, makes a specialty paper used in retail inserts, catalogs and magazines, officials said.

Fraser's other properties include a paper mill in Madawaska, a sawmill in Ashland and a pulp and paper mill in Gorham, N.H., in addition to properties in Quebec and New Brunswick. Last year, Fraser closed its mill in Berlin, N.H., with a loss of 250 jobs.