PT Paper sold to Lindsay Goldberg

By Scott Wilson of the Leader
Posted 2/10/15

Port Townsend Paper Corporation and affiliated Canadian plants have been sold by one New York-based investment firm to another, but with company officials touting the longterm benefits expected from …

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PT Paper sold to Lindsay Goldberg


Port Townsend Paper Corporation and affiliated Canadian plants have been sold by one New York-based investment firm to another, but with company officials touting the longterm benefits expected from the new owners, Lindsay Goldberg LLC.

The 300 employees of PT Paper along with the 300 employees of the finishing plants which operate as Crown Packaging, along with local community leaders, were informed of the transaction on Tuesday, Feb. 10, although rumors had been swirling for some time.

Lindsay Goldberg, an asset investment firm based in New York that manages $10 billion in equity capital, has signed a "definitive purchase agreement" for the enterprise, according to a company statement, and has created a new holding company, Crown Paper Group, as the new ownership entity. The transaction is set to close in the coming few days, according to the statement.

"This is very, very positive for us," said PT Paper President Roger Hagan, who will continue in that role for the new owners. "They will invest here and in the mill, and they will invest in other assets that will grow the company as a whole." Hagan said Lindsay Goldberg had appointed a group of five experienced pulp and paper executives to serve as an advisory board and oversee the growth of the new company.


All of them, said Hagan, are professionals with whom he has worked in the past. All were top executives with Smurfit-Stone Container or its successor company, RockTenn, a global pulp, paper and container board company, for which Hagan is also a former manager and executive.

"It's a pretty nice deal that way," he said Tuesday. "Their role is to help advise and steer the additional investment and modifications in our operating plant that will make us better. These are longterm paper people. They have lots of experience that will bring us value."

In the financial transaction, Crown Paper Group has purchased PT Paper and the Canadian finishing plants from the previous holding company, which was wholly owned by Goldentree Asset Management, an equity investment firm also based in New York. Goldentree, with $22 billion of assets, had held the mill and its subsidiary operations since the enterprise emerged from a Chapter 11 bankruptcy and financial restructuring in 2007. PT Paper was one of Goldentree's smallest holdings.

There are no immediate plans for changes, Hagan said. Hagan himself has purchased a home in Port Townsend and has become locally active with organizations such as the Northwest Maritime Center, and is a steady supporter of the Jefferson Land Trust, United Good Neighbors, Rotary and many other organizations.

The chief executive officer for the new holding company, Crown Paper Group, is Steve Klinger. Klinger, based in Atlanta, was president and Chief Operating Officer of Smurfit-Stone, based in the southeastern U.S. Hagan will now work for Klinger.

“We are energized by the opportunity to work with the customers and employees of the Port Townsend Paper mill, Crown Corrugated, and Boxmaster,” said Klinger in a statement. “We have a track record of engaging employees in involved and productive workplaces, embracing safe work practices, minimizing our environmental footprint, and partnering with the communities in which we operate.”


Lindsay Goldberg, according to its website at, and to Hagan, is a different kind of asset management firm than Goldentree. Goldentree's specialty is purchasing distressed companies at low prices, turning them around through new management and cost-cutting, then selling them at a profit for its investors. That, in fact, is what Goldentree appears to have accomplished with PT Paper between 2008 and 2015.

Hagan acknowledged that Goldentree received "an acceptable price" for the local mill and its subsidiaries.

Lindsay Goldberg, by contrast, is committed to becoming "long-term partners with family business owners, management teams and exceptional CEOs who have as their goal significant long-term growth in their enterprise," according to a company statement. A letter from its managing partners, Alan Goldberg and Robert D. Lindsay, goes on to say: "We are not short-term holders of companies for a quick profit. Our investor base and structure permit us to invest new capital in a business over the course of 10 years and own it for up to 20 years."

Hagan agreed with that statement.

"Unlike other equity firms that buy distressed companies to flip, their strategy is much more longterm," he said. "They buy good, viable companies to have the potential to invest and build up to even stronger companies."

Hagan noted he has a long history with Alan Goldberg. Goldberg was on the board of directors of Smurfit-Stone during the time that Hagan was a top manager there.

"He knows the business, he knows the packaging business," said Hagan. "He is interested in building the company."

Indeed, investment is soon needed. PT Paper is committed to a major upgrade of air pollution scrubbing equipment for the emissions from Power Boiler No. 10 expected to cost over $10 million.


This is Lindsay Goldberg's first and only pulp, paper and packaging company. The investment firm's other holdings range from insurance and financial companies to energy companies and steel distributors. While Lindsay Goldberg usually partners with other investors, and the specific financial details of the new ownership were not revealed, Hagan offered that Lindsay Goldberg is "providing the bulk of the capital and security that secures the business, and then they have affiliates, people who go and help build a company up."

Some mill observers had speculated that the best new ownership outcome for PT Paper would be another paper company, rather than an equity investment firm. But Hagan said Lindsay Goldberg may well prove to be the best possible new owner of PT Paper.

"It maintains us as an independent, being able to capitalize on many things we've been able to do over the years, to service a particular part of the market," he said. "It keeps us in that and gives us more capabilities. From the standpoint of the community, Port Townsend is not terribly corporate-minded, so maintaining more independence is probably a positive for the community," in contrast to ownership by a large corporate pulp and paper company with multiple plants.

The new advisor board of directors consists of Matt Denton, CFO; Mike Exner, Board Advisor for mill operations; Steve Strickland, board advisor of sales and packaging; and Craig Hunt, director of administration, environmental and compliance. All of them have previous executive experience at Smurfit-Stone and/or RockTenn.


Crown Packaging is the name of the Canadian subsidiary of PT Paper which has operated container board finishing plants in Western Canada. It was acquired by Port Townsend Paper in 2001 under then-Chief Executive Officer John Begley as a way of adding value to the raw output of container board from Port Townsend. The Crown plants take a substantial amount of PT Paper's container board and produce cardboard boxes and other packaging material used primarily by Western Canada agricultural companies to ship fruit, baked goods, meat and other foods.

Crown Packaging consists of two plants, including Boxmaster, in the Vancouver, B.C. area, and distribution centers in Kelowna, B.C. and Calgary, Alberta. The company serves 900 wholesale customers, according to the Crown website.

Crown Packaging's president is Joe Beers, a Port Townsend native who had been a longtime Port Townsend Paper manager.


What is now called Port Townsend Paper was opened in 1928 by Crown Zellerbach (no connection to the new owner, Crown Paper Group). In the late 1970s and early 1980s, Crown’s timberlands and industrial operations were split apart during a corporate takeover attempt. In 1983, the mill was sold to the West German company Haindl Papier; it had 500 employees including a bag plant.

In 1997, the mill was sold to Northwest Capital Appreciation (NCA), a Seattle-based equity firm, which recruited former Weyerhaueser executive John Begley as company president. In 2001, PT Paper purchased Crown Packaging of British Columbia, which would re-manufacture PT Paper’s containerboard into finished boxes and other packaging materials. The Canadian plants take 40 percent of PT Paper’s total output.

In 2006, due to global recession and high interest rates on debt, PT Paper is in serious financial trouble and eventually declares Chapter 11 bankruptcy in order to reorganize its financial structure. In 2007 PT Paper emerges from reorganization, now owned by its primary bondholder, Goldentree Asset Management of New York, a turnaround specialist. From 2010-2012 PT Paper studied adding a biomass-burning electrical generation plant, but those plans were shelved. In 2013 Roger Hagan was hired as president of PT Paper.

On Feb. 10, 2015, Lindsay Goldberg LLC announced it was purchasing PT Paper from Goldentree.

(The Leader’s Allison Arthur contributed to this story.)


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