Wausau Paper announces buyer for Rhinelander, Mosinee mills - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Wausau Paper announces buyer for Rhinelander, Mosinee mills

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MOSINEE (WAOW) - Wausau Paper has announced it has a buyer for its Rhinelander and Mosinee mills.

According to a news release from the company, Wausau Paper has signed a letter of intent to sell its specialty paper business to a company controlled by a New York private equity firm, KPS Capital Partners L.P. Wausau Paper officials say the firm has "significant experience in the paper industry and in completion of complex corporate carve-outs."

The news release said the sale includes the assets at Wausau Paper's Rhinelander and Mosinee mills. The sale price is $130 million.

The private equity firm also plans to buy another company and combine it with the specialty paper business, according to the news release.

In the news release, Hank Newell, president and CEO of Wausau Paper, said, "We are pleased to have signed this letter of intent...which will provide proven operations and management leadership for the Paper business along with new opportunities to expand its product offerings and market reach."

Jared Levy, a spokesman for Wausau Paper, says he couldn't comment specifically on whether this move means the mills in Rhinelander and Mosinee will stay open, or whether they will close.

When asked about the future, Levy said, "We believe that this alternative will allow the technical specialty business to pursue additional opportunities to expand its product offerings and market reach."

Wausau Paper recently closed its mill in Brokaw, eliminating about 450 jobs, and announced it was shutting down its Brainerd, Minn., factory, eliminating 130 jobs.

The purchase also requires the new company to reach a collective bargaining agreement with the United Steelworker's Union, the release said.

USW International Vice President Jon Geenen said in a statement that the union is cautiously optimistic.

"We have had a long-term relationship with KPS, and have successfully worked with the company on numerous acquisitions that have resulted in the creation of thriving businesses," said Geenen. "We appreciate KPS's constructive approach to doing business."

USW represents workers at the Mosinee mill, according to a news release from the union.

In recent months, Wausau Paper and Starboard Value LP, a Manhattan hedge fund, have feuded over the future direction of the century-old company. Starboard has pushed for restructuring Wausau Paper since it began to accumulate a stake in it in 2011.

Wausau Paper announced in early March that it would add two new directors to its board who have been recommended by the investment firm.

In January, Wausau Paper said mills in Brainerd, Mosinee and Rhinelander were for sale, as the company planned to focus solely on making tissue and towel, which are produced at its mills in Kentucky and Ohio. The company recently celebrated a $220 million expansion at its Harrodsburg, Ky., mill that the company said would add about 80 jobs.

So what is the company that wants to buy the Mosinee and Rhinelander mills?

It's a private equity firm called KPS Capital Partners, based in New York. According to its website, KPS Capital Partners of New York is the manager of KPS Special Situations Funds, a family of private equity limited partnerships with $2.5 billion of assets. The company focuses on what it calls "constructive investing" in restructurings, turnarounds, and other special situations.

According to documents obtained from the Securites and Exchange Commission, KPS operates 85 manufacturing facilities in 25 countries, employing about 29,000 people.

According to the documents, KPS has a lot of experience buying parts of larger corporations and building them into stand-alone businesses. In fact, KPS acquired a major stake in the Waupaca Foundry in Waupaca in June 2012, according to the company. KPS calls Waupaca Foundry the largest iron foundry company in the world.

KPS also says it has a lot of experience in the paper industry listing several companies it has been involved with, according to the SEC documents.

KPS Portfolio Companies, as of last September, reported annual revenues of about $6.8 billion.

To view the SEC documents filed by Wausau Paper and KPS Capital Partners, click here.

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