Powerflute Sells Papierfabrik Scheufelen to Paper Excellence
May 3, 2011 - Finnish packaging producer Powerflute today said that it has agreed to sell Papierfabrik Scheufelen GmbH & Co. to Paper Excellence BV for a total consideration of EUR 38.5 million.
The deal calls for Paper Excellence to make two cash installments — EUR 25 million upon completion of the deal and EUR 7.5 million on October 31, 2011. Paper Excellence will also assume EUR 6 million of debt.
Powerflute said it will use about EUR 9 million of the proceeds from the sale to reduce debt.
Papierfabrik Scheufelen, which was acquired by Powerflute on January 1, 2009, operates a paper mill in Lenningen, Germany with a production capacity of 300,000 tonnes per year of coated woodfree papers from mixed hardwood and softwood pulps, sourced principally from South America and Northern Europe.
In a written statement, Powerflute said the divestment of Scheufelen was based the rising cost of pulp. "The business was heavily impacted by developments in worldwide pulp markets during 2009 and 2010 and we currently expect these challenging conditions to prevail for the foreseeable future.
"Shortly after the completion of the rights issue and placing in November 2010 an approach was received and although the Group would normally expect to own a business for a longer period, we concluded that Scheufelen would be better placed to withstand the challenges it faces as part of an integrated pulp and paper group."
After the divestment of Scheufelen, Powerflute’s only mill will be the Savon Sellu mill in Finland, which produces up to 300,000 tpy of Nordic semi-chemical fluting.
"Powerflute has achieved a significant return on its investment in a little over two years — a strong validation of our business strategy," said Dermot Smurfit, Powerflute's chairman.
"On completion of the disposal, Powerflute will be debt-free on a net basis and will have the capital structure and resources to continue to pursue its strategy of seeking opportunities to acquire underperforming businesses in the paper and packaging sectors,” Smurfit added.
SOURCE: Powerflute Oyj