Fortress Paper sells Lebel-sur-Quévillon pulp mill and sawmill
By CNW/Fortress Paper Ltd.
June 24, 2016 – Fortress Paper Ltd. is selling the buildings, equipment and other ancillary property relating to the non-operating pulp mill and sawmill in Lebel-sur-Quévillon, Que., to Nexolia Bioenergy Inc.
By CNW/Fortress Paper Ltd.
Fortress Paper is also selling its energy generation, connection and transmission plant and all related equipment located at Lebel-sur-Quévillon.
The sale is being conducted through Fortress Paper subsidiaries Fortress Global Cellulose Ltd. and Fortress Lumber Corp. and Nexolia subsidiaries LSQ Energy LP and LSQ Development LP.
“The sale of the LSQ Mill represents a divestiture of a non-core asset, which will release the company from a number of future obligations and allow it to focus on other value enhancing transactions to grow its business,“ said Yvon Pelletier, president and chief executive officer of Fortress Paper
The $15.36 million deal is expected to close on or before July 8.
The purchase price is to be comprised of: a $7 million secured note issued by Energy LP in favour of Fortress Global and Fortress Lumber; $860,000 by the assumption by LSQ Energy and LSQ Development of property tax liabilities of Fortress Global and Fortress Lumber; and the assumption by LSQ Energy and LSQ Development of up to $7.5 million of Fortress Global and Fortress Lumber’s liabilities under a trust agreement among BMO Trust Company 9109-3294 (9109), Québec Inc., Domtar Inc. and Fortress Global dated June 13, 2012.
Fortress Global and Fortress Lumber intend to assign the note to Investissement Québec (IQ) immediately following closing in consideration for an equivalent set off against the indebtedness owed to IQ by Fortress Specialty Cellulose Inc. (FSC). The note will be guaranteed by FSC, subject to a deferred payment obligation of up to five years, if necessary.
The closing of the agreement is subject to various conditions, including: LSQ Energy and LSQ Development having obtained third-party financing in respect of a portion of the purchase price and working capital; the governmental authorizations required for the consummation of the transactions contemplated in the agreement; the execution of an amended trust agreement and the release of Fortress Global and Fortress Lumber from all obligations under the trust agreement; the execution of amended superficies and servitudes agreements between 9109 and LSQ Energy and LSQ Development, permitting the transfer of certain LSQ Mill assets to LSQ Energy and LSQ Development; the release of the letters of credit in the aggregate amount of $1.125 million, which had been previously deposited by Fortress Global with Hydro Québec Distribution (HQD) in connection with its electricity supply contract; and LSQ Energy and LSQ Development entering into a non-production agreement with Fortress Paper providing for the non-production of dissolving pulp and paper grade pulp using the purchased assets at the LSQ Mill.
LSQ Energy and LSQ Development have deposited approximately $1.98 million into trust with their legal counsel. This amount will be used to pay on closing the property taxes owing by Fortress Global and Fortress Lumber and to allow LSQ Energy and LSQ Development to deliver to HQD the security necessary in order to release the letters of credit previously deposited by Fortress Global.