Brookfield Buying Fraser Papers Unit

(Reuters) – Canada’s Fraser Papers Inc (FRPPF.PK) on Tuesday sought court approval to sell assets of its specialty papers business to Brookfield Asset Management Inc (BAM.N) (BAMa.TO) for $185 million, court papers showed.

Brookfield will be the stalking horse bidder and set the floor at a bankruptcy auction, which will be open to higher and better offers for the assets.

In a separate filing with the U.S. bankruptcy court in Delaware, J. Peter Gordon, chief executive of Fraser Papers, said proceeds from the sale would be used to pay off certain debt.

Terms of the deal also include a $2 million termination fee payable to Brookfield if Fraser Papers decides to accept a bid from another party.

A hearing on the matter is scheduled for Jan. 15.

Fraser Papers, which has operations in eastern Canada and northern New England, filed for protection from creditors in June, saying losses from its pulp and lumber operations ate up the profits from its papermills. (Reporting by Santosh Nadgir in Bangalore; Editing by Mike Miller)