"After our parent company Crown Vantage was acquired last year (PrintWeek, 9 March 2001), the new owner [KPS] made it clear it was not its intention to hold onto us long-term," said Milne.

The MBO, which also involved financial director Bill Whyte and sales and marketing director Janey Hunter, will see the mill return to Scottish ownership for the first time in 20 years.

Royal Blue Holdings is an investment of US private equity fund KPS Special Situations Fund, which purchased Curtis US-based parent company Crown Vantage last March.

Milne said that after a number of interested parties came forward for the mill last year, he decided to put together the MBO, which was backed by lenders including the Bank of America.

"This means we can now take the business forward as we want to, without being responsible to a parent company," said Milne.

The deal has also broken new ground having been mostly funded by trade finance, and is believed to be the first Scottish MBO with the debt part-funded by asset finance.

Milne plans to expand Curtis niche product offerings and the sectors in which the company operates.

"Securing the business underscores our commitment to providing our employees with long-term stability, an opportunity to share in the future success of the company," Milne said.

Curtis Fine Papers operates two mills at Guardbridge, St Andrews, and Dalmore, Midlothian. It employs 427 staff and has a turnover of 40m.

The firm produces over 40,000 tonnes of special make, security and branded papers each year and is best known for its Classic and Conservation uncoated fine paper brands.

Story by Andy Scott