Clearwater Paper Corporation plans to build a new tissue machine and related converting equipment for producing premium and ultra-premium grades of private label tissue products at a site adjacent to the company's existing facility in Shelby, North Carolina.
The company will install a 200-inch Valmet NTT tissue machine and related converting equipment. The new tissue machine will produce a variety of high-quality private label premium and ultra-premium bath, paper towel and napkin products. At full production capacity, the new tissue machine is expected to produce approximately 70,000 tons of tissue products annually.
The estimated cost for the project includes approximately $283 million for the tissue machine, converting equipment and buildings, and approximately $57 million for the purchase and expansion of an existing warehouse that will consolidate all southeastern warehousing in Shelby.
Clearwater Paper projects that the construction of the new facility will be completed in early 2019 and fully operational in 2020. Assuming the paper machine is fully sold out, it is expected to contribute an incremental $55 to $65 million of EBITDA based on $38 to $48 million of estimated operating income and approximately $17 million of estimated depreciation. The expected internal rate of return (IRR) for this project is 11%.
The company expects to fund the project with cash flow from operations and its revolving line of credit. It is expected that capital will be deployed over the next 30 months with approximately one-third deployed in 2017, approximately two thirds in 2018 and any remaining amount in 2019.
Clearwater Paper intends to start construction during the 2Q of this year. Converting and warehouse operations are expected to be completed during the second half of 2018, and the tissue machine is expected to be completed during the 1Q 2019.
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp.