M-real to Sell New Thames Mill in the UK
Feb. 5, 2008 - M-real on Friday said that it has agreed to sell its New Thames office paper mill located in Kemsley, UK, to DS Smith Plc for GBP 60 million.
Under the terms of the deal, the New Thames mill will continue to produce office paper for M-real into the latter part of 2008. After that, the production of office paper will cease and DS Smith will convert the mill's production to raw material for corrugated board.
Taking the uncovered pension liabilities of M-real's UK mill operations into consideration, it is estimated that the transaction will have a positive impact of about EUR 60 million on cash flow, of which about EUR 40 million will arise when the transaction is completed and about EUR 20 million in the following 12 months, M-real said.
The sale will be booked in the result for the first quarter of 2008, M-real added.
"We are streamlining our office paper production by concentrating it on the newer mills. The continuation of the present production in the New Thames mill would require major investments. And it is also expected that the decision now made will contribute to positive price development in the office paper sector," said Mikko Helander, M-real's CEO.
The New Thames mill has an annual capacity of 230,000 tonnes of office paper on one paper machine. The mill employs some 280 people and has sales of approximately EUR 160 million.
The deal is subject to regulatory approvals.