Mercer International Inc. Announces Agreement for the Acquisition of the Celgar NBSK Pulp Mill for $210 Million
23 Noviembre 2004 - 6:30AM
PR Newswire (US)
Mercer International Inc. Announces Agreement for the Acquisition
of the Celgar NBSK Pulp Mill for $210 Million NEW YORK, Nov. 23
/PRNewswire-FirstCall/ -- Mercer International Inc. ("Mercer" or
the "Company") (NASDAQ:MERCSNASDAQ:TSX:NASDAQ:MRI.U) today
announced it has entered into a definitive agreement to acquire the
Celgar pulp mill. The Celgar mill is a modern producer of NBSK pulp
with an annual production capacity of approximately 430,000 tonnes
located at Castlegar, British Columbia, Canada. The purchase price
for the mill, excluding an amount for defined working capital on
closing, is $210 million, of which $170 million is payable in cash
and $40 million is payable in shares of Mercer. The acquisition is
subject to a number of conditions customary for transactions of
this type, including receipt of certain regulatory approvals and
Mercer effecting satisfactory financial arrangements to complete
the transaction. On a combined basis, the acquisition will position
Mercer as the largest publicly traded market producer of NBSK pulp
in the world with an annual NBSK pulp production capacity of
approximately 1.3 million tonnes. Jimmy Lee, Mercer's President and
Chief Executive Officer stated: "This transaction clearly fits
within our strategy of focusing on world class production assets
that produce high quality NBSK pulp. Celgar is one of the few
large, modern and efficient NBSK mills that can match our existing
operations in terms of capacity and technical age and we are very
pleased to be able to secure the mill at well below the replacement
cost of comparable facilities. The transaction will be a major
expansion of our pulp business where we feel we can generate strong
value through active management. The Celgar mill's operations are
highly complementary to our existing European facilities and will
permit us to coordinate our pulp sales on a global basis to better
serve our larger customers." He added: "The Celgar mill has been
operating under receivership for several years and we believe as
the new owner there are a number of areas where we can improve
financial operating performance and increase NBSK pulp production."
Mr. Lee concluded: "Our seasoned management team has successfully
completed significant expansions, construction and start-ups of
pulp mills and has successfully optimized their performance. We are
confident that we can make this acquisition successful for all of
our stakeholders." David Gandossi, Mercer's Chief Financial
Officer, stated: "The Celgar mill represents an outstanding
opportunity for our stakeholders, given that we expect the
transaction to be accretive to earnings and cash flow. Furthermore,
the acquisition will diversify our cost base away from Euros and
enhance our position as a leading player in the NBSK pulp segment."
Terms of the Transaction Under the terms of the agreement, Mercer
will pay total consideration of $210 million for the Celgar pulp
mill, of which $170 million is payable in cash and $40 million is
payable in shares of Mercer. The price per Mercer share will be
equal to the weighted average trading price for Mercer shares for a
20 day period preceding closing, subject to a maximum price of
$9.50 and a minimum price of $7.75 per share. The shares of Mercer
to be issued as partial payment of the purchase price have not been
registered under the United States Securities Act of 1933 and may
not be offered or sold in the United States absent registration or
an applicable exemption from the registration requirements.
Additionally, Mercer will acquire certain defined net working
capital of the Celgar mill on closing. The transaction, to be
accounted for as an asset purchase, is expected to close in early
2005. The transaction requires certain regulatory approvals
including the expiration or earlier termination of the applicable
waiting periods under the Competition Act (Canada) and the
Hart-Scott-Rodino Antitrust Improvements Act and a determination
that the transaction is of net benefit to Canada under the
Investment Canada Act. The acquisition is also subject to Mercer
securing satisfactory financing and closing occurring on or before
February 28, 2005 with an extension available under certain
circumstances. Mercer intends to raise the required capital for the
transaction by way of both equity and debt capital. Additional
information with respect to the proposed financing for the
transaction will be made available in December. Mercer also intends
to establish a new working capital revolving debt facility for the
Celgar pulp mill. Celgar NBSK Mill The Celgar mill underwent a
CDN$850 million rebuild and modernization program in 1993. As a
result, the mill is a high quality, continuous process NBSK pulp
mill with a current annual production capacity of approximately
430,000 tonnes with modern power generation and environmental
treatment facilities. The mill has diverse fiber supply
arrangements with numerous regional sawmills as well as a dedicated
workforce that benefits from a five year collective bargaining
agreement. As a result of cost overruns and indebtedness incurred
in connection with the modernization program, the Celgar mill's
then shareholders assigned it into bankruptcy in 1998.
Subsequently, the Celgar mill's two senior secured lenders
appointed a receiver for the mill's assets. KPMG Inc. has operated
the Celgar mill as a receiver and trustee since 1998. Mercer
believes that the Celgar mill represents operations with similar
underlying profit potential and low maintenance capital
requirements as its Rosenthal mill and recently completed Stendal
mill in Germany. Mercer Mercer is a European pulp and paper
manufacturing company. Mercer currently operates two modern NBSK
pulp mills in Germany with an aggregate annual production capacity
of approximately 862,000 tonnes. To obtain further information on
the Company, please visit its web site at
http://www.mercerinternational.com/. In conjunction with this
release, Mercer International will host a conference call, which
will be simultaneously broadcast live over the Internet. Management
will host the call, which is scheduled for Wednesday, November 24,
2004 at 10:00 AM (EST). Listeners can access the conference call
live and archived over the Internet through a link at the Company's
web site at http://www.mercerinternational.com/ or at
http://phx.corporate-ir.net/playerlink.zhtml?c=62074&s=wm&e=975087.
Please allow 15 minutes prior to the call to visit the site and
download and install any necessary audio software. A replay of this
call will be available approximately two hours after the live call
ends until December 1, 2004 at 11:59 P.M. (EST). The replay number
is (800) 642-1687, and the passcode is 2456112. This release does
not constitute an offer of any equity or debt securities for sale.
Any securities that may be offered in an unregistered offering will
not be registered under the Securities Act of 1993 and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The preceding
includes forward looking statements which involve known and unknown
risks and uncertainties which may cause the Company's actual
results in future periods to differ materially from forecasted
results. Among those factors which could cause actual results to
differ materially are the following: market conditions,
competition, construction and equipment performance risks and other
risk factors listed from time to time in the Company's SEC reports.
DATASOURCE: Mercer International Inc. CONTACT: Jimmy S.H. Lee,
Chairman & President, +41-43-344-7070; or David M. Gandossi,
Executive Vice-President & Chief Financial Officer,
+1-604-684-1099, both of of Mercer International Inc.; or
Investors: Eric Boyriven or Media: Scot Hoffman, both of Financial
Dynamics, +1-212-850-5600 Web site:
http://www.mercerinternational.com/
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