Orchids Paper Products Company recently announced its plans to invest $30.4 million to upgrade its papermaking and converting assets at its paper mill in Pryor, Oklahoma (USA).
The mill project will replace two existing tissue paper machines and start-up in approximately 20 months.
The new tissue machine will be supplied by Recard, S.p.A, providing the following advantages:
•Improved quality and manufacturing flexibility. The new paper machine will be capable of producing a broader range of paper grades that are utilized in value and premium tier products. It will replace two paper machines that produce paper utilized only in value tier products. This provides greater flexibility to the operation and allows for maximizing production output across all paper machines.
•Increased capacity and lower production costs. The project is expected to increase the annual capacity of Orchids' paper mill from 57,000 tons to over 70,000 tons. Completion of the project will provide Orchids with sufficient paper to produce approximately 11 million cases of converted products annually. The new machine offers higher production rates and improved energy efficiency, thereby resulting in significantly lower production costs than the two machines being replaced.
•Return to the shareholders. The combination of lower production costs and increased capacity is expected to increase annual EBITDA by approximately $6 million to $8 million once the project is complete.
The converting line project is an upgrade to an existing asset and will improve manufacturing flexibility and capacity with a lower cost structure. This project is expected to be completed by the end of 2014 and to generate an additional annual EBITDA of $2.8 million to 3.4 million when fully utilized.
