Norske Skog to Sell Hebei Mill in China for RMB 925 Million
Sept. 24, 2009 - Norske Skog said that it has entered into an agreement with Shandong Huatai Paper to sell Norkse's Hebei newsprint mill in Zhaoxian, China.
The sale price is RMB 925 million (NOK 800 million).
Norske Skog said the sale will reduce its net debt by around NOK 800 million while freeing up resources to strengthen the effort to improve profitability at Norske Skog's other mills.
"In spite of hard work for several years we have not managed to turn a profit in China," said Norske's CEO, Christian Rynning-Tønnesen.
"In June this year, we announced the sale of our mill in Shanghai," continued Rynning-Tønnesen. "With the sale of Hebei, Norske Skog is no longer producing paper in China.
"The sale of Norske Skog Hebei is a continuation of our effort to reduce Norske Skog's net debt and improve profitability," he added
Norske Skog Hebei has a production capacity of 330,000 tonnes of newsprint.
There are about 250 employees at the mill.
The deal is subject to approval from Chinese authorities.
Norske Skog expects the transaction to be finalized by the end of 2009.
Norske Skog has operated the two Chinese newsprint mills Norske Skog Hebei and Shanghai Norske Skog Potential Paper since 2005, when Norske Skog bought out its partner and became the sole owner of the PanAsia Paper Company.
Shandong Huatai Paper is China's largest producer of newsprint, and holds other business activities. The company is headquartered in the Shandong province in Eastern China.
SOURCE: Norske Skog