Norske Skog to Sell Korean Newsprint Mills
June 23, 2008 - Norske Skog said that it has entered into a definitive agreement to sell its Korean subsidiary, Korea Co. Ltd., for NOK 4.3 billion (USD 830 million) to Morgan Stanley Private Equity Asia and Shinhan Private Equity.
The deal includes Norske Skog's two newsprint mills in Korea, Jeonju and Cheongwon.
"The sale of the business in Korea will reduce Norske Skog's net debt by approximately 25 percent. This will give us more financial flexibility, and provide an improved basis for the further work to restructure the group," said Norske Skog's CEO Christian Rynning-Tønnesen.
The sale calls for NOK 3.2 billion (USD 620 million) in cash as well as assumption of liabilities; out of which USD 130 million is an inter-company loan which will be repaid to Norske Skog from Norske Skog Korea Co Ltd. at closing.
Norske Skog expects the deal to close in late July/early August.
The Jeonju mill has a production capacity of 825,000 tpy, while the Cheongwon mill has a production capacity 190,000 tpy. Both mills produce newsprint and employ about 800 workers in total, including the administration in Seoul.
Norske Skog's sales office in Singapore will continue to handle export sales in Asia on behalf of the divested entity.
According to Norske Skog, the divestiture will have limited operational effect for its remaining business. The company said it will remain a significant producer of newsprint in the Asian market through its mills in China, Thailand, and a 34 percent ownership in Malaysian Newsprint Industries.
The sale is subject to approvals from Korean competition authorities, consent from certain of Norske Skog lenders and other customary closing conditions.
Norske Skog acquired the Cheongwon mill in 1998. The following year, Norske Skog established the joint venture PanAsia with two other paper producers, and both Cheongwon and Jeonju became part of PanAsia. From November 2005, the activities in Korea have been fully owned by Norske Skog.
SOURCE: Norske Skog