Grasim, the group’s Indian company, would hold 40 per cent stake in AV Terrace Bay, while the remaining 60 per cent would be held by Thai Rayon. The transaction, subject to court approvals in Canada and other regulatory approvals in Canada, Thailand and India, is expected to be closed by July 31.
In January, Terrace Bay Pulp Mill was placed under the Companies Creditors Arrangement Act.
“The acquisition of the Terrace Bay Mill and its subsequent conversion into a dissolving grade pulp mill is a major strategic move. In the viscose staple fibre (VSF) business, we enjoy global leadership. To sustain growth, we have an integrated business model, spanning the entire value chain—from plantation to pulp to fibre. Terrance Bay Mill…will be geared to provide superior quality pulp for our VSF plants worldwide," said Aditya Birla Group Chairman Kumar Mangalam Birla.
Over the next three years, Grasim would contribute Rs 242 crore ($44 million) of the total equity contribution of $110 million. An additional Rs 1,375 crore ($250 million) would be invested in a phased manner to enable the mill to produce dissolving grade pulp, with a capacity of 2,80,000 tonnes a year, the group said in a statement.
Till its conversion, likely in 2015-16, the mill would produce and sell paper grade pulp. These operations should restart by October, the statement said. Terrace Bay Pulp Mill is considered an anchor mill, owing to its location and significant consumption of residual chips produced by regional sawmills.
The Aditya Birla Group has significant presence in Canada. Its major companies include AV Nackawic and AV Cell in the pulp & fibre business, Aditya Birla Novelis in the metals business, Aditya Birla Minacs in the ITES business and Columbian Chemicals in carbon black business.
Shares of Grasim on Thursday closed at Rs 2,659.80, down 0.73 per cent on the Bombay Stock Exchange.
