To conclude a presentation to interested community stakeholders on Wednesday, June 1, Catalyst Paper Corporation’s Powell River division vice-president and general manager Fred Chinn said, despite recent talks of corporate takeover, the mill is here to stay.
“This is a company that’s going to be here,” said Chinn at the meeting, “and this is a mill that’s going to last.”
Chinn answered questions from stakeholders on the recent news that India-based Kejriwal Group International (KGI) has targeted Catalyst for takeover.
Chinn said KGI’s owner Rahul Kejriwal has already had conversations with Catalyst’s board of directors and has been “looking to buy a pulp and paper company for a while.”
Kejriwal wants to build up Catalyst, not break it up, said Chinn
“He doesn’t want to carve it up and sell it off,” he said. “It’s not profitable enough to sell the pieces. This is something you buy as a whole.”
The proposed deal involves Catalyst’s four largest shareholders, who control 79 percent of its shares. An expression of intent would allow KGI to acquire shares at $6 each.
On news of the potential acquisition, Catalyst shares skyrocketed by almost 750 percent on the Toronto Stock Exchange and closed at around $5 per share on May 24; price has since settled at about $4.50 per share.
Chinn said Kejriwal has looked to acquire Catalyst because of its low share price and the company’s potential for growth.
“Buy now when it’s cheap and build it into what [Catalyst president and chief executive officer] Joe Nemeth and the board of directors want to build it into,” said Chinn.
According to Powell River mayor Dave Formosa, if a deal can be made between Kejriwal and Catalyst, it will be a good thing for the city.
“He has rightfully found Catalyst as a good target,” said Formosa. “It is a good target because they survived; they’ve actually acquired other mills. They’re a great target for somebody who is really interested in making paper.”
Formosa said Catalyst is converting machinery to produce sustainable papers, including those used for medical purposes, papers used in food packaging and other paper products.
“They’re trying to retool and rebuild themselves,” he said. “This person, I am told, has that vision.”
According to Chinn, two short-term challenges face Powell River’s mill: US Food and Drug Administration approval for producing new paper to be used in food packaging on paper machine 11; and a hearing in regard to a countervailing duty that Catalyst was hit with by the US Department of Commerce in August 2015.
During his presentation, Chinn said paper machine 11 is now being converted for dual capabilities, producing the specialty products mentioned by Formosa and other regular products. Retooling should be completed later this year.
“It will be the first machine in the world that can do those things,” said Chinn. “Generally, it can do one or the other. We’ve come up with a real innovative design.”
A decision on whether or not the Kejriwal takeover deal will go ahead is not expected until October.