M-real Corporation Stock Exchange Release 1.2.2008
M-real Corporation, part of the Metsäliitto Group, has agreed to sell
its New Thames office paper mill located in Kemsley, UK, to DS Smith
Plc. The selling price is GBP 60 million.
The mill will continue to produce office paper on M-real's account
towards the end of 2008. After that it will cease to produce office
paper and DS Smith will later start up the production of raw material
for corrugated board in the mill.
Taking the uncovered pension liabilities of M-real's UK mill
operations into consideration, it is estimated that the transaction
will have a positive impact of about EUR 60 million on cash flow, of
which about EUR 40 million will arise when the transaction is
completed and about EUR 20 million in the following 12 months. After
the sale, M-real has no significant uncovered pension liabilities in
the UK. In addition, M-real will be freed from about EUR 35 million
pension liabilities and other closure costs previously provided for
the period 2008-2015 related to the closure of the Sittingbourne
No significant capital gain or loss is expected to arise from the
transaction. The impact of the pension liabilities and the final
result and cash-flow effect of the transaction will be clear by the
end of the first half of 2008. The transaction has no significant
impact on M-real's operating profit excluding non-recurring items.
The sale will be booked in the result for the first quarter of 2008."We are
streamlining our office paper production by concentrating it
on the newer mills. The continuation of the present production in the
New Thames mill would require major investments. And it is also
expected that the decision now made will contribute to positive price
development in the office paper sector," says Mikko Helander, CEO,
M-real New Thames mill's paper machine has an annual capacity of
230,000 tonnes of office paper. The mill employs some 280 people and
has sales of approximately EUR 160 million.
DS Smith Plc is an international Group focused on packaging. The
Group's revenue is about GBP 1.8 billion and it employs over 11,000
people in 16 countries.
The transaction is subject to approval by the competition
Seppo Parvi, CFO, tel. +358 10 465 4321
Anne-Mari Achrén, Communications, tel. +358 10 465 4541