Norske Skog Sells Stake in Shanghai Newsprint Mill
July 13, 2009 - Norske Skog said that it has sold its 56 percent stake in Shanghai Norske Skog Potential Paper (SNP) — a newsprint mill in China.
The Norweigian papermaker said the sale of SNP shares "frees up resources" for its remaining newsprint mill in China, Norske Skog Hebei. In addition, maintaining its stake in SNP would have required Norske Skog to invest further capital in the mill.
"The sale of SNP frees up resources for the work to improve profitability at Norske Skog Hebei, while at the same time streamlining sales and administration in China," said Norske's CEO Christian Rynning-Tønnesen. "Avoiding further cash injections was also important for Norske Skog," he added.
Norske Skog's businesses in China has consisted of the two newsprint mills — SNP and Norske Skog Hebei — as well as the administration and sales office in Shanghai.
Norske Skog Hebei came on-stream in 2005 and has an annual capacity of 330,000 tonnes of newsprint. It's one of the most modern newsprint mills in China.
SNP, with an annual capacity to produce 145,000 tonnes of newsprint, is one of the smallest mills in Norske Skog's global portfolio
Since 2005, Norske Skog has owned SNP in partnership with Potential Industries (34 per cent) and Shanghai Baoshan Shi Dong-kou Economic and Trading General Co (10 per cent).
Norske Skog said an agreement has been made under which Potential Industries will take over all of Norske Skog's shares in SNP. The deal states that all debts and other commitments remain with SNP.
The sale includes an accounting loss of NOK 255 million for Norske Skog, which will be recorded by minus NOK 315 million in the accounts for the second quarter of 2009, and by NOK 60 million from positive translation differences in the accounts for the third quarter of 2009.
The deal is subject to approval by Chinese authorities and is expected to close by the end of September 2009.
SOURCE: Norske Skog