M-real to Reduce Stake in Metsa Fibre

April 11, 2012 - M-real Corporation, a part of Metsa Group, has agreed to divest 7.3 percentage points of its shareholding in Metsa Fibre Oy to the Japan-based Itochu Corporation for EUR 138 million and approximately 0.5 percentage points of its holding in Pohjolan Voima Oy to Metsa Fibre for EUR 64 million.

The closing of M-real's divestment of the 7.3 percentage point shareholding in Metsa Fibre is subject to German competition authority approval and it is expected to take effect by end 2Q 2012. Once the announced restructuring of the ownership of Metsa Fibre is completed, M-real owns 24.9 per cent, Metsaliitto Cooperative 50.2 per cent and Itochu Corporation 24.9 per cent of the company.

The divestment of the 7.3 percentage point shareholding in Metsa Fibre is done to reduce M-realís pulp surplus and to further strengthen Metsa Fibreís business especially in the growing Asian market. Once the transaction is completed, M-realís pulp surplus reduces from approximately 0.5 million annual tonnes to 0.3 million annual tonnes.

After the 0.5 percentage point reduction of shareholding in Pohjolan Voima that took effect today, M-real owns approximately 2 per cent of the company.

M-real will in the 2Q 2012 Other operations' operating result book as a non-recurring item a capital gain of approximately EUR 88 million related to the Metsa Fibre shares to be divested. The Other operations' 2Q 2012 operating result will also include as a non-recurring item a realized fair value and gain of approximately EUR 40 million related to the divested Pohjolan Voima shares that does not have an impact on the companyís total equity. The divestments have a negative impact of approximately EUR 15 million on annual operating result compared to actual results in 2011. The divestments have an approximately 40 percentage point positive impact on M-realís net gearing compared to end 2011.

"We are reducing our pulp surplus according to our strategy. The transaction with Itochu provides an excellent possibility to develop Metsa Fibre further and shows also the great value of our pulp assets. Also in the future we produce more pulp than we use, thus we continue to have a good platform to grow our profitable paperboard business. These divestments also strengthen the company's liquidity without having a material impact on our operating cash flow,Ē comments M-realís CEO Mikko Helander.

Itochu Corporation is one of the largest trading companies in Japan with approximately 130 bases in different industries in close to 70 countries. Itochu Corporationís trading volume for the fiscal year ended on 31 March 2011 exceeded EUR 100 billion.

Annual General Meeting of M-real Corporation decided on 28 March 2012 to change the companyís business name to Metsa Board Corporation. The new business name is expected to be officially registered during April 2012. Before the official registration the companyís stock exchange releases are sent under the name M-real Corporation.

SOURCE: M-real Corporation