Stora Enso to Sell Mill Operations in Kotka, Finland, and Malaysia

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Stora Enso, Helsinki, Finland, will sell its integrated mills at Kotka in Finland and its laminating paper operations in Malaysia to private equity firm OpenGate Capital, Los Angeles, Calif., USA. Stora Enso says that selling these operations is in line with its Aug. 19, 2009, announcement to re-focus the company's business portfolio. Total consideration of the sale, including earn-out, is up to EUR 24 million. The divestment is expected to be finalized during the second quarter.

As part of the transaction, Stora Enso will divest its laminating paper, special coated magazine paper, and sawmill businesses at Kotka, also including the fully-owned laminating paper subsidiary in Malaysia, and the business operations of the Tainionkoski paper machine No. 7, which will remain in Stora Enso's ownership, but will be leased to the new owner. The Kotka mill site and its buildings are included in the divestment.

Based on 2009 annual figures, the divestment is estimated to reduce Stora Enso's annual sales by EUR 203 million, improve its annual operating profit by EUR 11 million, and reduce its working capital by EUR 24 million. The divestment will reduce Stora Enso's annual production capacity by 180,000 metric tons of machine-finished coated paper (MFC), 200,000 metric tons of laminating paper, 40,000 metric tons of Imprex products, and 230,000 cubic meters of sawn wood. The 570 employees affected, including 480 working at Kotka, 50 at Tainionkoski, and 40 in Malaysia, will transfer to the service of the new owner. Stora Enso and OpenGate Capital will make an agreement about wood supply as part of the divestment.