Wausau Paper has signed a non-binding letter of intent to sell its specialty paper business to a NewCo, according to Recycling Today. Newco is a newly formed company tied to investment funding from KPS Capital Partners LP, a New York based private equity firm. KPS is said to have significant experience in the paper industry.
KPS also announces that it has signed a non-binding letter of intent to acquire an as yet undisclosed company that it will combine within NewCo with Wausau’s specialty paper business. Wausau has the option to have an initial ownership position in NewCo of up to 25 percent, with the opportunity to earn up to an additional 5 percent stake pending NewCo reaching certain performance thresholds.
As part of the transaction, NewCo will acquire the assets of Wausau Paper’s mills in Rhinelander and Mosinee, Wisconsin, for an initial cash purchase price of around $130 million.
The assets of Wausau’s Brainerd, Minnesota, mill are not included in the transaction. As well, the transaction requires that the United Steelworkers ratify new collective bargaining agreements with NewCo.
Wausau will retain legacy defined benefit pension and post-retirement liabilities related to the businesses being sold to NewCo.
“We are pleased to have signed this letter of intent with KPS, which will provide proven operations and management leadership for the paper business, along with new opportunities to expand its product offerings and market reach,” says Hank Newell, CEO of Wausau Paper, as quoted by Recycling Today.
“This announcement represents an important step in the strategic repositioning of Wausau Paper, narrowing our focus on our tissue business and creating additional value for shareholders,” he adds.
