Cardboard company Norampac said Friday it is selling its Red Rock linerboard mill in northwestern Ontario to North American Logistic Services Inc. for an undisclosed price.

Norampac, a division of Cascades Canada Inc., said it will pay the Brampton, Ont.-based buyer $10 million "in order to encourage the startup of a new line of production at the facility."

The Red Rock mill, which used to employ 300 people, was idled indefinitely in October 2006 because of economic conditions, including the rise in the Canadian dollar against the U.S. greenback.

"We are pleased to contribute to the economic development of the region, by allowing the startup of a new business, which should prove favourable for the local economy," Marc-André Dépin, Norampac's president and CEO, said in a release.

The transaction is expected to be concluded by the end of October.

North American Logistics Services is a 20-person company that does shipping, warehousing and Canadian and U.S. customs brokerage services across the continent.

Company president Bob Van Patten said the facility will employ about 110 people and restart production in the fall of next year, adding that it will take about $90 million in private and public money to begin operations.

Van Patten said the $10 million from Norampac will be divided, with $5 million going to an environmental fund for any future site remediation, and the other $5 million allocated to keep the plant open until production can resume.

At a news conference, Van Patten said he was initially approached in June by the union that represented the workers in the Multiply mill about reopening the the Nipigon mill. That mill suffered extensive damage in a fire in February 2007.

Van Patten said he liked the Multiply product, but decided it would cost too much to rebuild the Nipigon mill, so he approached Norampac about buying the Red Rock plant.