Resolute Forest Products is set to be sold, but company officials promise business as usual for Thunder Bay
$3.5B transaction is subject to shareholder and regulatory approvals
One of the most significant employers in northwestern Ontario is set to be sold to a private multinational company.
The Paper Excellence Group, which purchased Domtar last year for approximately $3 billion, announced on July 6 that it had reached an agreement to purchase Resolute for approximately $3.5 billion ($2.7 billion U.S.). Resolute operates facilities in northwestern Ontario, including Thunder Bay, Atikoken, and Ignace.
The transaction is subject to shareholder and regulatory approvals.
The company subsequently announced that it intends to sell Domtar's mills in Dryden and Espanola in anticipation of "anticipated regulatory requirements" related to the Resolute transaction.
Resolute had been eyeing upgrades to its Thunder Bay pulp and paper mill to make the facility more competitive, according to Seth Kursman, Resolute's vice president of corporate communications, sustainability and government affairs. He said he expects Paper Excellence would likely continue on that path.
"When you're a private company … Frankly, you can invest more, and you can invest quicker," he said of Paper Excellence.
The northern area director for the union representing Resolute Forest Products workers, said he too is optimistic about the pending purchase.
"They've got money for investment. Right?" said Unifor's Gary Bragnalo.
"From the announcement, it just says it could accelerate it. So that should be a good sign for us. And a good sign for the community."
'Very good operators'
Paper Excellence is owned by young entrepreneur Jackson Widjaja, whose grandfather, Eka Tjipta Widjaja, founded Indonesia's Sinar Mas group and its subsidiary Asia Pulp and Paper.
The younger Widjaja saw a flourishing market for pulp and paper in Asia and began investing in Canada in order to access its fibre supply, said Peter Woodbridge of Woodbridge Associates, a forestry consulting firm that advised the company for around a decade.
"They've always been very good operators," said Woodbridge, who described Widjaja as a visionary and shrewd business executive.
"One thing they've always said and always done for my experience is they've always committed to the future. They're long-term thinkers, they're not here for the short term."
Paper Excellence intends to run Resolute on a "business-as-usual-basis," using the Resolute name and maintaining Resolute's senior management, according to a news release issued July 6.
That business-as-usual approach extends to its relationships with First Nations Kursman said.
Fort William First Nation Chief Peter Collins told CBC News he hopes the sale will not impact his community's rapport with Resolute, which operates a mill in the First Nation and celebrated the 20th anniversary of their working relationship last August.
However, he expressed disappointment at being taken by surprise by the announcement of the purchase agreement.
"It's frustrating," he said. "We've built such a good partnership with Resolute, [and] they didn't think it was important enough to inform us of the possibility of the company being taken over."
Kursman said the company reached out to Collins as soon as it could, but it had to be extremely careful not to disclose any details of the negotiations publicly.
"There's a lot of regulatory oversight because you're dealing with securities," he said.
Continued investment in innovation
Over at Domtar's Dryden mill, it will also be business as usual, said Bonny Skene, the regional public affairs manager for Domtar in Canada.
No sale of the mill is anticipated unless the Resolute purchase closes, which is expected to be in the first half of 2023, Skene said.
"In the meantime, we are focused on conducting safe, reliable, efficient operations," she said.
When it comes to Resolute's investment in forestry innovation, Woodbridge said he anticipates that Paper Excellence would "absolutely" continue on the same path.
Resolute's mill in Thunder Bay has been involved in two pilot biorefinery projects with FP Innovations, the Canadian non-profit that does research and development for the forest industry. The refineries extract lignins, the polymers that hold trees together, which researchers use to develop products such as green chemicals.
"Think of Paper Excellence as being the startup company, the huge Chinese investor, that came in, was buying mills when everyone else is failing in this industry," Woodbridge said.
"You know, at the time, they were the only company that was willing to invest dollars in the forest industry, and governments respected that. Unions respected that."
CBC News requested an interview with a representative of Paper Excellence. The company responded by sending a statement confirming its intent to sell the Dryden and Espanola facilities contingent on the Resolute sale being approved.
It said, "Paper Excellence fully supports the management teams of both Domtar and Resolute."
- A previous version of this story stated Resolute operates facilities in Dryden and Espanola, Ont., in fact, those facilities are operated by the Domtar Corp.Jul 13, 2022 12:39 PM ET