Cascades Inc. recently announced plans to proceed with the strategic Bear Island mill conversion project located in Virginia. Subject to obtaining final permits, the currently idled newsprint machine will be converted to a containerboard machine capable of producing high-quality, lightweight, 100% recycled linerboard and medium for the North American market.
To finance the equity portion of the Bear Island mill conversion, Cascades is also announced that it entered into an agreement with CIBC Capital Markets, RBC Capital Markets and BMO Capital Markets on behalf of a syndicate of underwriters, pursuant to which Cascades will issue from treasury, and the Underwriters will purchase on a ‘bought deal basis’, 7,441,000 common shares at a price of $16.80 per share, for gross proceeds of approximately $125m.
The total cost of the Bear Island mill project will be US$380m, which includes the initial US$35m acquisition cost paid to White Birch Papers in 2018. Following completion of the Offering, the equity requirements of the Bear Island mill project will be fully financed. The plant will have an annual production capacity of 465,000 tons and is scheduled to start up in the fourth quarter of 2022. It will operate at approximately 80% of capacity by the end of 2023, reaching 100% by the end of 2025.
“This investment, one of the largest in our company’s history, is a decisive and very important strategic move in the modernization of our packaging assets,” said Mario Plourde, President and Chief Executive Officer of Cascades. “By adding the Bear Island mill to our platform, more than 60% of our containerboard manufacturing capacity will be in the top quartile of the industry. In addition to offering a development platform, this mill will strengthen our geographic positioning and presence in the U.S. and will enhance the competitiveness of our asset base and our product offering regardless of economic conditions.”
He continues, “From an operational standpoint, Bear Island will optimize the flexibility of our manufacturing platform by providing a product offering that will be complementary to its sister plant Greenpac, located in Niagara Falls, NY. Bear Island will also offer 100% recycled products with light basis weights. Greatly valued by our current and future customers, these eco-responsible products are particularly well suited for e-commerce.”
“The significant expertise that was developed within Cascades from the Greenpac build, and the ongoing success of this mill give us full confidence that we will increase our market share and expand our geographic footprint in the United States. Bear Island will be equipped with the latest technology and will be able to offer one of the lightest high-end 100% recycled containerboard products on the market,” said Charles Malo, President and COO of Cascades Containerboard Packaging.
