Aditya Birla Group inks deal to buy pulp mill in Canada

Visakhapatnam (Andhra Pradesh)12-10-2011:Cloth on display at the Linen Club showroom which was inaugurated in Visakhapatnam on Wednesday. ---photo:C.V.Subrahmanyam.

Aditya Birla Group, on Thursday, announced that it has signed an agreement to buy the Terrace Bay Pulp Mill in North Western Ontario, Canada.

The acquisition will be made through a special purpose vehicle (SPV), AV Terrace Bay Inc. (Canada).

The deal size is not disclosed.

However, a statement from the Aditya Birla Group said that group company Grasim Industries would hold a 40 per cent stake in AV Terrace Bay Inc., and the remaining 60 per cent by Thai Rayon Public Ltd., Thailand. Over the next three years, Grasim would contribute $44 million out of the total equity of $110 million.

The Terrace Bay Mill was placed under CCAA (Companies Creditors Arrangement Act) in January 2012.

The AV Birla Group will invest more than $250 million in a phased manner to convert the mill to produce dissolving grade pulp with a capacity of 2.80 lakh tonnes per annum. The transaction is subject to court and other regulatory approvals in Canada, Thailand and India, and is expected to close by July 31, 2012.

Until the conversion, which is likely to happen by 2015-16, the mill will produce and sell paper-grade pulp. Paper-grade pulp mill is expected to restart by October 2012. Terrace Bay Mill is considered an anchor mill due to its location and its significant consumption of residual chips produced by the regional sawmills.

In a statement, Kumar Mangalam Birla, Chairman, Aditya Birla Group, said, “The acquisition of the Terrace Bay Mill and its subsequent conversion into a dissolving grade pulp mill is a major strategic move. In the viscose staple fibre (VSF) business, we enjoy global leadership. To sustain ongoing growth, we have an integrated business model, spanning the entire value chain from plantation to pulp to fibre. The Terrace Bay Mill, upon conversion, will be geared to provide superior quality pulp for our VSF plants worldwide.”

The Aditya Birla Group already has a significant presence in Canada with a 6,000 strong workforce. Its major companies — AV Nackawic, AV Cell in the pulp & fibre business, Aditya Birla Novelis in the metals business, Aditya Birla Minacs in the ITeS business and Columbian Chemicals in Carbon Black business have existing operations in Canada.