Tembec sells most of its stake in N.B. mills for $9M
MONTREAL - Tembec Inc. (TSX:TMB) has sold a 20 per cent interest in AV Nackawic Inc. and AV Cell Inc. to partner Aditya Birla Group, retaining a five per cent stake in the dissolving pulp businesses.
Tembec said Monday it received $9 million for the holding, and the Indian conglomerate also bought out a $6.75-million loan Tembec had made to AV Cell.
"This transaction makes sense to Tembec as we have decided to focus our resources on strengthening the company's balance sheet and to focus our efforts on our core business units," president and CEO James Lopez said in a release.
AV Cell in Atholville employs 275 workers and produces 340 tonnes per day of specialty grade dissolving pulp for the textile industry. AV Nackawic, employing 300, is being converted from paper pulp to dissolving pulp.
"The long-standing relationship with Tembec will continue with fullest co-operation as before and the Birla Group is indeed happy that Tembec remains a much valued shareholder in both these companies," said Shailendra Jain, director of Birla's pulp and staple fibre business.
Peter Vinall, president and chief executive officer of the AV Group, called the deal a "logical step" for Birla, which requires more pulp as it expands its operations.
"They are the largest rayon maker in the world and embarking on an ambitious expansion plan. To support that expansion, they need more pulp,'" said Vinall.
Tembec is an integrated forest products company with operations in North America and France and about 8,000 employees.
In Monday morning trading on the TSX, Tembec shares were up five cents at $3.90.
- with files from Reid Southwick
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