Koch Industries to buy Georgia-Pacifics pulp operations

<p>A Koch subsidiary, KoCell, announced Thursday it had signed a letter of intent to buy Atlanta-based Georgia-Pacifics pulp operations for $610 million.</p><p>The deal would include mills in Brunswick, Ga., and New Augusta, Miss., along with a short-line railroad serving the Mississippi mill.</p><p>Koch Industries said the deal includes assumption of $73 million in debt. The sale, which is contingent on regulatory approval, is expected to be completed in the first quarter of this year.</p><p>Koch spokeswoman Katie Stavinoha said it was too early to speculate about what changes the Wichita-based company might make in those operations. The Brunswick mill employs 780 people, and the New Augusta mill has 325 employees.</p><p>The Brunswick mill has an annual capacity to produce 826,000 tons of fluff pulp, the stuff used to make such things as disposable diapers, baby wipes and sanitary products.</p><p>In 2002, the New Augusta mill had a capacity to produce 628,000 tons of market pulp _ which is used to make fine papers, postage stamps, tissue products and coffee filters. That mill also began production of fluff pulp last year.</p><p>Atlanta-based Georgia-Pacific said it expects the sale _ consisting of assets and stock of its Brunswick Pulp & Paper subsidiary _ will generate net after-tax proceeds equivalent to an asset sale of about $735 million.</p><p>The transaction is another step in Georgia-Pacifics ongoing efforts to focus on differentiated businesses, said A.D. Pete Correll, chairman and chief executive officer.</p><p>Divestiture of these operations will generate significant cash toward debt reduction and further transition our companys portfolio of assets.</p><p>Greg Guest, a spokesman for Georgia-Pacific, said the figure cited by his company reflects the tax benefits because the deal involves a partial asset and partial stock transaction.</p><p>Georgia-Pacific expects its actual after-tax cash proceeds will be $535 million.</p><p>The company has been working to put the mills on the market for several years as part of its move to focus on end-products that are closer to consumer rather than on raw commodities, Guest said.</p><p>Jeff Gentry, senior vice president of Koch Industries, said the acquisition continues the effort by Koch companies to find strategic opportunities.</p><p>We hope to apply the operating, marketing and trading experience weve gained in other commodity businesses in combination with these excellent assets and a world-class work force to position the business for even greater success in the future, Gentry said.</p>