MeadWestvaco selling paper mill to KapStone Paper & Packaging Corp.

MeadWestvaco Corp., one of the region's largest and oldest private-sector employers, said Monday it is selling its 71-year-old North Charleston paper mill and other assets to KapStone Paper and Packaging Corp for $485 million in cash.

“MWV’s growth strategy is focused on providing total packaging solutions for customers in growing global consumer products markets,” said John A. Luke, Jr., chairman and chief executive officer. “The North Charleston mill is an industry-leading facility and is well positioned to succeed in its markets, yet it is no longer an optimal fit with our long-term consumer packaging strategy.”

KapStone also is buying a lumber mill in Summerville, and chip mills in Elgin, Hampton, Andrews and Kinards.

KapStone started in the paper business from scratch. It raised $120 million by selling shares to the public in August 2005. The company has been on a bit of a buying spree. In January 2007, it spent $155 million in cash to acquire from International Paper Co. an unbleached paper mill in Roanoke Rapids, N.C., and a paper bag factory in Arkansas.

It is still a relatively tiny operation, with just 710 employees at the end of 2007.

At the close of the sale, KapStone will own 100 percent of an electrical generating plant at the North Charleston mill, which last year produced 833,000 tons of paper products for folding cartons.

"I think employees know this is a good change," said MeadWestvaco spokeswoman Pam Wheeler. "I think it’s going to give the mill a lot of opportunities to grow. ...I think you’ll find the Charleston area will still continue to enjoy the benefits of MeadWestvaco.

The mill opened in July 1937. "The mill just isn’t a fit anymore in our long-term strategy," she added. "...We know that that’s the best move for the mill. We know that it’s the best move for the workers and the community."

The company has 600 local employees who don't work at the mill and thus won't be affected. The approximately 1,100 employees at the mill and other facilities will be transferred to KapStone immediately following the completion of the sale. The sale is expected to close in the third quarter.

Andrea Tarbox, chief financial officer of Northbrook, Ill.-based KapStone, said Monday that no layoffs are planned as part of the acquisition.

“We think it’s a terrific group of people down there and we don’t have plans to downsize,” she said. “That being said, we might reconfigure things at some point, but I can’t even say that yet.”

She said KapStone is “very excited about the team that we’re getting.”

“Some positions at the mill are handled at MeadWestvaco’s corporate headquarters (in Richmond, Va.), so we may have to replace those people down there,” Tarbox said. “And we’re certainly not going to be adding them up here in Illinois.”

MeadWestvaco will continue to provide wood fiber for the North Charleston mill through a fiber supply agreement.

MeadWestvaco said it will use proceeds from the sale to pay down debt.

North Charleston Mayor Keith Summey said he was made aware of MeadWestvaco’s sale ahead of time.

“It’s just a matter of changing the name on the side and front of the building," he said.

Summey said he saw signs that something was imminent when MeadWestvaco sold its property on Remount Road and moved its credit union.

“Of all the indications, this is the best-case scenario,” Summey said. He noted that KapStone “will be working to make that property a more productive plant. In the manufacturing business, there are products that don’t always fit with the product line. This new company was interested in the product line they were producing.”

Warren Wise contributed to this report.