The mill in Abercrombie Point, Nova Scotia, consists of one machine with annual capacity of approximately 270,000 tonnes of softwood pulp. In 2007, approximately 90% of the mill's production was northern bleached softwood kraft pulp.

The sale agreement pertains only to the Pictou mill and associated woodlands operations; Neenah Paper will retain the 500,000 acres of timberlands that it owns in Nova Scotia.

Neenah expects to pay approximately $15 to $20 million to Northern Pulp to assist the new company in its transition to stand-alone status. Payments will be made in two installments, the first at the time of closing and the second in the third quarter.

Final amounts will be subject to adjustments based on levels of working capital, capital spending and costs incurred during the recent mill annual maintenance down.

As part of the terms of the sale, Northern Pulp will assume all assets and liabilities associated with the Pictou operations, as well as existing customer contracts, supply agreements, labor agreements and pension obligations.

In addition, Northern Pulp and Neenah Paper have agreed upon a market-based fiber supply agreement to ensure ongoing fiber supply to the mill.

"This sale is the last major step of our strategy over the past three years to transform ourselves from a commodity pulp and paper company to a performance-based specialty products and premium fine paper company," said Sean Erwin, CEO and chairman.

"Without pulp, Neenah Paper will be less capital intensive and less volatile and we can focus on our core businesses and the sale of our remaining timberlands," he said.

"We are pleased with the sale to Atlas and Blue Wolf, as they are experienced owners and operators of pulp and paper mills who are committed to long-term success in these industries. While we will make an initial payment under the agreement, overall we expect to be over $20 million cash positive as a result of tax benefits that result from the write-off and sale of the mill."

The transaction will enable the continuation of operations at the mill, which has been a critical component of the northern Nova Scotia economy since its founding in 1967. The Canadian pulp industry has been adversely affected by a severe downturn in the lumber industry.

Northern Pulp said the existing management team will remain in place and will be equity owners in the new business. Northern Pulp will be led by Nova Scotia native Keith L. Johnson, who will continue in his current position as General Manager.

"The Pictou mill is well-maintained, is in a prime location relative to both the Nova Scotia wood basket and to its customers in the U.S. and Europe, and has strong customer relationships,"said Adam Blumenthal, Managing Partner of Blue Wolf.

"These attributes will create a strong foundation on which to build an independent, competitive company that can ride out the current cycle and thrive as the market rebounds. As with all of our investments, we expect to work closely with management and labor to improve productivity during this challenging time."

Timothy Fazio, managing partner of Atlas, said, "While the pulp industry is currently in a ‘perfect storm’ caused by skyrocketing wood chip costs, a strong Canadian dollar and high energy costs, we believe that Northern Pulp is a viable business.

"We have years of experience with complicated issues in commodity industries, and we are confident that our experience, along with that of senior management and the people who work here, will allow us to continue to operate this mill as a strong player in the global marketplace.”