Nippon Paper Industries USA Co., Ltd.


Nippon Paper Industries USA sells mill and cogeneration assets to McKinley Paper Company

Corporate Finance case study

Client:

Nippon Paper Industries USA Co., Ltd.

Solution:

Corporate Finance

Services:

Financial advisory

Overview

The Port Angeles mill had been owned and operated by Nippon Paper Industries USA Co., Ltd. (“NPIUSA”) since 1988 and had recently experienced a downturn with the collapse of the global directory and newsprint markets. NPIUSA had invested significant capital into the construction of a new cogeneration plant just prior to the market shift and management most recently attempted to transform the mill into a specialty paper business, which proved to be challenging and produced mixed results.

While demand for printing and writing papers has dropped nearly 50% since 2000, demand for containerboard is enjoying a resurgence as the global economy emerges from the downturn. In North America, increasing employment, wages and consumer spending have driven domestic demand for manufactured goods, building materials, food and beverages products, and the boxes they’re packaged and shipped in. Add on the increase in on-line shopping and increasing exports throughout North America and the Asia Pacific, and the containerboard industry appears very strong indeed.

Challenge

After conducting a strategic review of NPIUSA’s global operations, the Tokyo-based company determined that the Port Angeles mill did not fit with NPIUSA's global strategy and objectives and began looking for an appropriate buyer.  

Solution

PwC’s long-standing relationship with NPIUSA and our Forest, Paper and Packaging (FPP) M&A experience, meant we were strongly positioned to advise the client on this transaction.

PwC ran a competitive sale process and was able to source and approach a diverse group of buyers including, both financial and strategic players. NPIUSA preferred to find a buyer that would continue transformation initiatives at the mill in order to make it, once again, a competitive player in the market and save jobs for the community. 

PwC was able to obtain multiple offers for the assets and ultimately the client chose to negotiate final sale terms with McKinley Paper Company (“McKinley”), a subsidiary of Mexico-based Bio-Pappel S.A.B. de C.V (“Bio Pappel”).

Result

“We found these assets fit well with our strategy to increase our presence in the North American packaging industry. McKinley will pursue the execution of a comprehensive conversion and modernization program in order for the mill to become a competitive player. This plan also includes investments into a forward-integration facility, near the packaging market, to transform paper rolls into high-value added products, and replicate McKinley’s sustainability model at the Port Angeles operations.” – Herb Baez, Vice President, McKinley

As a result of the transaction with McKinley, NPIUSA was able to save significant closure costs in addition to transitioning the business over to a buyer who plans to continue and operate the mill moving forward.

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