Blue Wolf acquires pulp mill business

The New York private equity firm continues investing in pulp and paper mills, braving the ‘perfect storm’ of skyrocketing energy costs and a strong Canadian dollar.

New York-based private equity firm Blue Wolf Capital Management and investment firm Atlas Holdings have continued their strategy of targeting pulp operations in North America with the acquisition of a Nova Scotia pulp mill.

The duo purchased the mill and its associated timberlands business from Neenah Paper for an undisclosed “nominal” sum. Neenah will retain ownership of 500,000 acres of timberland, while a new management company, Northern Pulp, will operate the mill.

The lumber industry in Canada has been severely hit by rising wood chip costs, a strong Canadian dollar and high energy costs. A statement today said Neenah would pay Northern Pulp up to C$20 million ($20 million; €13 million) to “assist its transition to stand-alone status.” It added the existing management would remain in place and be led by existing general manager Keith Johnson.

The Pictou, Nova Scotia deal follows on from the duo’s acquisition last year of Finch Paper Holdings, a pulp and paper mill in northern New York state. Just two months after acquiring Finch, Blue Wolf and Atlas sold 161,000 acres of surrounding forest land, located in the Adirondacks, to a non-profit conservation group for $110 million or $683 an acre.

Adam Blumenthal, Blue Wolf managing partner, said the Nova Scotia acquisition would enable the mill to continue operating, saying it had been a critical component of the region's economy since its founding in 1967.

The mill, he said, was well-maintained, in a prime location and had strong customer relationships. “These attributes will create a strong foundation on which to build an independent, competitive company that can ride out the current cycle and thrive as the market rebounds.”

He was joined by Atlas's managing partner Timothy Fazio who said the Canadian pulp industry was facing a “perfect storm” caused by “skyrocketing wood chip costs, a strong Canadian dollar and high energy costs.
We have years of experience with complicated issues in commodity industries, and we are confident that our experience, along with that of senior management and the people who work here, will allow us to continue to operate this mill as a strong player in the global marketplace.”

Blue Wolf, founded in 2005 by Adam Blumenthal and Josh Wolf-Powers, focuses on middle-market companies with ties to governments, labor unions and similar organizations.