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Wednesday, 28 March 2007 00:00

New Zealand group eyes Blue Ridge Paper

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Blue Ridge Paper Products might have found a buyer — a New Zealand-based paper company called The Rank Group that has recently moved into the United States paper market.

 

The main investor in Blue Ridge Paper recently has been aiming to sell its share of the company. The investor, a firm called KPS, was never viewed as a long-term owner of Blue Ridge Paper, so the news comes as no shock. KPS was looking for an investment when the paper mill came along in 1999.

The mill was slated for closure in 1999 by its former owner, Champion International. Employees agreed to a 15 percent wage cut and no raises for seven years if they could find an investor to back the mill and keep it open. KPS was lured by the fire sale price. KPS has a 55 percent share of the company and the employees collectively own the rest.

While KPS has bought and sold several investments in the meantime, it seems to have been stuck with Blue Ridge Paper, which has consistently operated in the red.

The time for KPS to make good on its investment could be running out, with the clock ticking on $125 million in bonds that come due in 2008, along with 9.5 percent interest. Blue Ridge took out the bonds in 2003, along with a $50 million line of credit, needing a cash infusion to help stay afloat.

Blue Ridge CEO Rich Lozyniak said in an interview last year that a sale of the mill would not be bad news. The day KPS unloads their share in Blue Ridge Paper will mean the company is doing well: it is attractive to a buyer and the value is finally up enough that KPS can make a profit.

Blue Ridge Paper products is the last large manufacturing industry in Western North Carolina, with more than 1,300 workers at its main plant in Canton and satellite operation in Waynesville. Blue Ridge Paper has two main product lines: envelope paper and slick coated cardboard used in juice and milk cartons. It has also several niche lines of specialty papers and cardboards.

Blue Ridge Paper would not share any details of the talks with The Rank Group, such as the buying price or the fate of employee wages.

Blue Ridge Paper, which has public stock offerings, must follow strict rules in making “forward-looking” statements that could influence or inflate their share costs by misleading investors. So Blue Ridge Paper offered this disclaimed in its announcement: “There can be no assurance that a definitive agreement will be reached by the parties or that a transaction will take place between Blue Ridge and the Rank Group now or in the future.”

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