Norske Skog to Sell Parenco Paper Mill in the Netherlands to H2 Equity Partners
Aug. 2, 2012 (Press Release) - Norske Skog has entered into an agreement to sell its paper mill Parenco in Renkum in the Netherlands and the global recovered paper business, Reparco, to investment firm H2 Equity Partners. Norske Skog expects to release cash from the transaction in the order of EUR 30 millions.
The transaction is part of the effort to reduce Norske Skog's net debt.
H2 sees good growth opportunities for the mill, and will consider conversion of the mill to produce packaging paper.
"The sale is part of our strategy to improve Norske Skog's cash flow and financial position. Profitability at Parenco has been a challenge for a long time, and we have considered both sale and closure of the mill. We are very pleased to be able to sell to a company with long-term plans for the overall operations at Parenco," says President and CEO in Norske Skog, Sven Ombudstvedt.
"We are happy that we can bring the good news that this company, with its 100 years of history, can continue to operate. It is a good, well positioned paper mill, with well-motivated, expert staff, modern equipment, and it is geographically well situated. The sourcing of raw material from Reparco adds strategic value. We see good growth opportunities for Parenco, mainly driven by the substitution to higher quality magazine paper grades as well as the on-going growth in relevant publishing segments such as door-to-door retail folders. It is our ambition to create a healthy company with high quality, sustainable products and a defendable market position, in line with the overall mission of H2 Equity Partners to build better businesses," says Harmen Geerts, partner at H2 Equity Partners.
Deliveries to existing customers will be effectuated according to current agreements. H2 will establish a commercial team and network of sales agents at Parenco, as the current Norske Skog sales organisation only will support Parenco for a limited time. The transaction will have little operational impact on the rest of Norske Skog. Norske Skog will remain a significant producer of newsprint and magazine paper in Europe with production facilities in Norway, Germany, France and Austria.
Parenco currently operates one of its two paper machines. H2 will look into new markets that may be served with the now idle second paper machine. This market orientation will take 6-12 months. However, should there be no viable future for operating a second machine, the machinery would remain idle, and Parenco would restructure the organization to align current staffing with market conditions. H2 has secured support for its approach from both the works council and the trade unions.
The sale will be finalized and recognised in the third quarter of 2012. The sale is subject to merger control approval in the Netherlands. The works councils of Parenco and Reparco have already given a positive advice on the sale to H2.
H2 will appoint Frans Versteeg, an experienced senior executive who is currently acting as Parenco's interim general manager, as the new managing director of Parenco. Kurt Martens will stay on as managing director of Reparco.
H2 Equity Partners (H2) is an independent private equity firm founded in 1991, with offices in Amsterdam, Cologne and London. H2 focuses on turnaround and growth investments in medium-sized companies in Benelux, Germany and UK.
Lysaker, 2 August 2012
SOURCE: Norske Skog