Sappi Fine Paper North America (SPP), Wednesday revealed its decision to permanently close operations at its coated fine paper mill in Muskegon, finding a deterioration in demand for coated fine paper due to the global economic slow down. The company operated a single paper machine with an annual production capacity of 170,000 metric tons at the site.
Sappi expects to record a charge of nearly $30 million in the fourth quarter as separation and other closure costs. An estimated of $10 million would be recorded as non-cash charges, out of the total charges for the quarter.
Ralph Boettger, chief executive officer of Sappi Ltd, the parent of Sappi Fine Paper North America, stated, "In North America, industry conditions remain very challenging, with current year to date shipments of coated wood free paper down 32 percent from 2007 levels and only modest recovery forecast for 2010. The permanent closure of the Muskegon Mill, while an extremely difficult decision to make, is necessary to ensure that we remain competitive in today's global marketplace."
According to Sappi, the mill closure would affect about 190 salaried and hourly Muskegon employees, who have been on furlough since the suspension of operations announced in March 2009.
The company noted that it would provide separation benefits and job placement services to salaried employees and start discussions with union representatives regarding the terms of hourly employees' separation benefits.
The company also stated that the cessation of operations at the Muskegon Mill will not affect the product lines offered as the products previously made at Muskegon would be produced at its other mills.
SPP is currently trading at $3.69, down $0.21 or 5.26%, on a volume of 0.62 million shares on the NYSE.
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