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October, 2001

EIM Forest Products Manufacturing Assets. October, 2001. Forest Products Manufacturing Assets. Papiers Stadacona Garden State Paper LLC. Newsprint Mills – Strategic Rationale for Purchase.

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October, 2001

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  1. EIM Forest ProductsManufacturing Assets October, 2001

  2. Forest Products Manufacturing Assets • Papiers Stadacona • Garden State Paper LLC 1

  3. Newsprint Mills – Strategic Rationale for Purchase • Credibility associated with control of physical supply enables term physical purchases and sales of newsprint 2

  4. Newsprint Mills - Key Facts Garden State Paper LLC Papiers Stadacona • Located in Garfield, NJ • Acquired August, 2000 for $77 million • Opened 1961, major improvements in 1966, 1974, 1985, 1992 • Newsprint capacity 218,000 metric tonnes/year (EIM-traded product) • Consumes 280,000 ton/year ONP (EIM-traded product) • % newsprint volume sold through EIM desk by year-end: • 2001 – 94% • 2002 – 98% • 2003 – 100% • Location in the heart of NE hubs for newsprint and ONP is the mills biggest advantage • Mill was neglected by previous owner, faces cost and quality challenges • Original plan to spend $8.5 million/year in capex for maintenance of business (MOB) more likely to be ~$16 million/year for both MOB and profit improvement • GSP reports operationally through Stadacona; new GM and technical resources supplied from Quebec • Located in Quebec City, Quebec, Canada • Acquired March, 2001 for $360 million • Opened 1927, major improvements in 1988 and 1992 • Newsprint capacity 390,000 metric tonnes/year (EIM-traded product) • Other products: • 94,000 metric tonnes/year directory paper • 45,000 mtpy paperboard products (e.g., posterboard, folder stock, ticket stock) • 50 million board feet per year lumber • Consumes 285,000 bone dry metric tonnes (BDMT)/year wood chips • Consumes 190,000 metric tonnes/year ONP (EIM-traded product) • 1,128 employees (largest private employer in metropolitan area) • % newsprint volume sold through EIM desk by year-end: • 2001 – 43% • 2002 – 51% • 2003 – 86% • Mill is very well-run and profitable, with competitive costs and quality • Strong management team being leveraged at Garden State Paper 3

  5. Financial and Operating Results (from acquisition dates through August 2001) 4

  6. Summary • Definite impact on market credibility and change in behavior toward a commodity market • Stadacona has outperformed cost and productivity projections • Garden State has under-performed cost and productivity projections • Garden State remains a marginal mill from industry cost and quality perspective • Stadacona has extremely strong management team, which is being leveraged at Garden State • Weak newsprint market prices in 2H 2001 have hurt financial performance of both mills 5

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