Sofidel has entered into a Stalking Horse Asset Purchase Agreement (APA) to acquire certain assets of American At-Home and AfH business Royal Interco (Royal Paper).
Speaking exclusively to TWM at Tissue World Düsseldorf last week, Sofidel Chief Executive and member of the Board of Directors Luigi Lazzareschi confirmed that – subject to the terms of the asset purchase agreement – the company will acquire four facilities across Arizona and South Carolina.
Lazzareschi said Sofidel chose the fully integrated manufacturer of personal and commercial paper products mainly for the location of the Arizona plant: “For us, the western side of the US is very interesting because it’s not overcrowded by many competitors. There are very, very few competitors that have production capabilities west of the Rockies.”
The purchase would include one paper mill in Gila Bend, Arizona, two converting facilities in Phoenix, Arizona, and one converting facility in Duncan, South Carolina.
Lazzareschi added that Sofidel would retain its position as America’s fourth largest tissue manufacturer following the purchase, and would further improve its geographical coverage across the country.
“We are the company that has the best geographical coverage of the west side, there are no other companies there,” he said. “We now have a very strong regional coverage across all of America.”
The last tissue machine installed by Royal Paper was in 2015, and Lazzareschi said the quality of the assets in general “are very good.”
“The Gila Bend paper mill alone represents an annual production capacity of approximately 61,000 metric tons, and the paper machinery is relatively new. The converting capacity is also in a. strong position and better than we had thought, producing 100,000tpy.”
Sofidel would also make employment offers to a significant portion of Royal Paper’s current 500 employees.
“One thing I would like to specify is the reason we are interested in the acquisition: Royal Paper has very important customers and its purchase will increase our portfolio, as well as having very interesting products and good asset quality,” he added.
On 8 April Royal Paper filed voluntary petitions to reorganise under Chapter 11 of the United States Bankruptcy Code. Through the proceeding, Royal Paper is conducting an auction process for the sale of these assets pursuant to section 363 of the Bankruptcy Code.
Lazzareschi added that the company had had reoccurring financial problems during the past three years due to several factors: “Sofidel would be buying most of the assets, some of their contracts, and we are buying the relationships they have with suppliers and also their customers.”
As for whether Sofidel has plans for any further acquisitions in the near future, Lazzareschi added: “Not for the moment. Never say never.”
The “stalking horse bid” is subject to higher and better offers and bankruptcy court approval, as well as other customary closing conditions, including the receipt of any required regulatory requirements.
