* Paper Excellence has purchased several mills recently
* Howe Sound long dogged by debt
VANCOUVER, July 15 Paper Excellence BV agreed
to buy Howe Sound Pulp and Paper on Thursday in the latest
expansion in Western Canada by the Netherlands-based unit of
Indonesia's Sinar Mas.
Howe Sound's joint owners, Canada's Canfor Corp (CFP.TO)
and Oji Paper Co Ltd (3861.T) of Japan, agreed to sell the
operation in Port Mellon, British Columbia for an undisclosed
price. The plant, near Vancouver, has long struggled with debt
Howe Sound employs about 500 workers and has production
capacity of 400,000 tonnes of NBSK pulp and 230,000 tonnes of
mechanical paper at the facility, which was first acquired by
Canfor in 1951.
The deal comes just three months after Paper Excellence
agreed to buy and restart a pulp mill in Mackenzie, British
Columbia, that had been idled since the 2008 collapse of Pope
Canfor and Oji Paper created the Howe Sound partnership in
1988 in a deal that expanded the plant's pulp production and
added its newsprint mill.
But debt and high capital costs dogged that expansion, with
Canfor writing off its investment in 1998 and the partnership
restructuring its finances in 2001 and 2008.
Howe Sound was not included in Canfor's spinoff of Canfor
Pulp, in which it still owns a 50.2 percent stake.
Paper Excellence has also bought two pulp mills in France
from Canada's Tembec Inc (TMB.TO).
(Reporting Allan Dowd; editing by Rob Wilson)