Stora Enso Strengthens Co-operation With IFC in Guangxi, China
Feb. 28, 2014 (Press Release) - Stora Enso is strengthening its partnership with International Finance Corporation (IFC) as part of developing its state-of-the-art plantation, board and pulp mill project in Guangxi, China. IFC has agreed to invest in an equity stake of RMB 356 million (EUR 43 million) in the project, representing a 5% shareholding in the project. Stora Enso will continue to own 83% of the project, with the remainder owned by Guangxi Forestry Group Co. Ltd and Beihai Forestry Investment & Development Company Ltd.
In addition, Stora Enso is in the final stage of concluding the long-term external financing for the first phase development of the project. The USD 460 million funding package will be provided under an IFC syndicate loan structure. It consists of a USD 88 million loan with twelve years tenor from IFC and a USD 372 million loan with eight years tenor provided by commercial banks through IFC. The funding package is expected to be obtained at an average interest rate of LIBOR +2.40%.
IFC has been supporting Stora Enso in Guangxi with a similar loan structure since 2005, and the long-term funding package is expected to replace the existing financing.
"We welcome the continued support from IFC. This shows the quality of the work we are doing in Guangxi," says Mats Nordlander, Executive Vice President, Stora Enso Renewable Packaging.
Stora Enso's investment project is divided into two phases. The first phase is to build a board machine to be ready in the beginning of 2016. The pulp mill will be constructed in the second phase and started up when the board machine is operational. The operations will supply customers with renewable material for products addressing the growing consumer market in China. This includes food, beverage and confectionary packaging.
A strong sustainability agenda is an integral component of the IFC engagement. The agenda includes for example livelihood development, world class environmental standards, and health and safety issues in the industrial and forestry operations.
Stora Enso employs some 1 100 people in Guangxi, and when the integrated mill is in operation the number of employees will be about 2 000.
The investment is pending conclusion of condition precedents as customary for this type of transaction.
SOURCE: Stora Enso