Cascades Inc. is selling its Dopaco business unit for US$400 million cash to a global packaging company based in New Zealand.
March 11, 2011
by CANADIAN PRESS
KINGSEY FALLS, Que.: Cascades Inc. is selling its Dopaco business unit to a global packaging company based in New Zealand and shrinking its workforce by 10% as it sells its Dopaco paper cup business to global packaging giant Reynolds Group for US$400 million.
Dopaco makes paper cups and folding cartons for fast-food restaurants and the food industry.
It has six plants: two in Ontario and four in the US.
Cascades didn’t disclose how the new owner plans to integrate the Dopaco business into its operations.
The buyer is Reynolds Group Holdings Ltd., a global supplier of consumer food and beverage packaging headquartered in Auckland, NZ.
Cascades, based in Kingsey Falls, Que., says it will use $337 million in net proceeds from the sale of Dopaco to pay down debt.
“This divestiture is part of our overall strategy to gain more financial flexibility and streamline our portfolio of assets to pursue the development of our core tissue, packaging and recovery operations,” said chief executive Alain Lemaire.
The Dopaco sale is the second time this week that Cascades has announced changes to its operations. On Thursday, it said it will close a box plant in Massachusetts and expand another in Connecticut.
Additional divestments are likely as Cascades seeks to further reduce its debt to three times EBITDA (earnings before interest, taxes, depreciation and amortization) from 3.3 times EBITDA following the Dopaco transaction.
The divestiture will reduce its net debt to capitalization level to 45%, the lowest level in more than a decade.Over the last 24 months, Cascades has reduced its debt by 40% or $700 million to $1.1 million.
© The Canadian Press