Lehman Brothers Collection - Contemporary Business Archives

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Lehman Brothers Collection

Twentieth-Century Business Archives

Southland Paper Mills, Inc. - Lehman Brothers Collection

Southland Paper Mills, Inc.

List of Deals

Southland Paper Mills was organized on June 13, 1938, by Charles H. Herty and a group of publishers in Texas. Herty, a chemist from Savannah, Georgia, perfected a process for making newsprint from Southern pine wood. The new company constructed the first Southern pine newsprint mill near Lufkin because of the wood, sulphur-free water supply, fuel, and transportation available nearby. At the time, it was estimated that within a fifty-mile radius of the plant site there were 3.5 million acres of growing Southern pine. This supply was expected to reproduce itself every fifteen years, whereas Canadian spruce would require sixty years. Engineers estimated that this mill would be able to manufacture newsprint at a lower cost than what was currently being paid for imported newsprint, primarily from Canada.

The plant and land cost $6 million. In addition to arranging for the mill construction, South Paper also acquired 108,000 acres of timber from four lumber companies. Approximately half of the cost of the investments came from a loan by the Reconstruction Finance Corporation, which lent $3.4 million. The first president was Ernest L. Kurth, who was also a major investor.

On January 1, 1940, Southland opened the 50,000-ton unit in Lufkin and after eleven months of operations reported net profits of $295,000. All of the output was contracted for by about twenty Southern newspapers.

Southland expanded the mill within two years, doubling its annual capacity from 50,000 to 100,000 tons.

By 1953 Southland expanded beyond the production of newsprint to manufacture kraft board. In 1953 it earned $3.2 million from sales of $19.9 million. In 1956 Southland announced plans to add a fourth newspaper manufacturing unit for completion in 1959. The company said it would boost annual capacity to nearly 300,000 tons. In 1956 the production capacity was 220,000 tons. It sold newsprint to 120 newspaper customers in the South and Southwest and manufactured container board.

In June 1966 St. Regis Paper Company, an integrated manufacturer of paper and related products, acquired 115,031 shares in Southland, which represented about 28 percent of the company. In May 1967 St. Regis Paper increased its interest in Southland to 38.6 percent. St. Regis did so by buying 37,875 shares from E.L. Kurth Jr., son of the first president of the company.

Southland completed construction of a new mill in Houston, Texas, in 1967, giving the company a total annual capacity of 425,000 tons of newsprint and 110,000 tons of kraft paper.

Southland sold a public offering of 500,000 common shares in 1971, the proceeds of which were to be used for timberland acquisitions.

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