JAY – International Paper Co. has agreed to sell its industrial papers business to Kohlberg & Co. LLC for about $180 million. The sale is expected to keep one of IP’s Jay paper machines running for at least 12 more years, according to officials.
IP’s industrial division produces about 400,000 tons of lightweight packaging papers a year, such as popcorn bags and drink pouches, of which 50,000 tons is produced at IP’s Androscoggin Mill in Jay.
The Jay mill will continue under IP ownership, according to IP corporate spokeswoman Jennifer Boardman.
The deal with Kohlberg does, however, include a 12-year exclusive supply contract for IP to produce lightweight industrial papers on its No. 5 paper machine in Jay, Androscoggin Mill spokeswoman Fiona McCaul said Monday.
Kohlberg & Co., founded in 1987, is a private equity firm with offices in Mount Kisco, N.Y., and Palo Alto, Calif. With its affiliates, Kohlberg manages more than $3.7 billion of capital, according to officials.
Through its affiliates, Kohlberg has completed more than 75 acquisitions and recapitalization transactions in a variety of industries, including a focus on investments in the manufacturing, health care, consumer products and service industries.
The Jay mill’s No. 5 paper machine produces uncoated, specialty grade paper for microwave popcorn bags, paper ream wrap and foil wrap for cigarette liner paper, among other items, and is part of IP’s industrial papers business, McCaul said.
The products produced on No. 5 will be sold to Kohlberg, she said, but IP will still own and operate the paper machine and Androscoggin Mill employees will continue to run the paper machine. Twenty-five employees work on the No. 5 machine, McCaul said.
The company’s other machines at its Jay mill – No. 2, No. 3, and No. 4 – produce coated paper for catalogs and magazines.
IP announced earlier this month it was shutting down the No. 1 paper machine at Androscoggin Mill indefinitely for economic reasons as of April 1, and laying off about 90 people.
“This will help our mill focus on our coated paper business,” McCaul said of Monday’s announcement. “Our company has been working to refine the focus on three core businesses: paper, packaging and forest products. The industrial papers business, which serves a specialty niche market, is outside of those three core business groups.”
Jay Town Manager Ruth Marden said she was informed early Monday about IP’s announcement.
“I think it’s wonderful,” Marden said. “We have a long-range contract for that paper machine so it will continue to be productive.”
IP also announced earlier this month it was shutting down a paper machine at a Florida mill and laying off about 120 employees.
The agreement announced Monday includes the sale of paper mills in DePere, Wis., which has two paper machines and 214 employees; and Kaukauna, Wis., which has six paper machines and 900 employees, Boardman said.
Packaging-converting operations also being sold are in Lancaster, Ohio, which has 61 employees; Menasha, Wis., which has 113 employees; and Heerlen, Netherlands, which has 88 employees.
Comments are no longer available on this story