Tembec Closes on Sale of European Subsidiary to Paper Excellence

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Tembec, Temiscaming, Que., Canada, this past week reported that its European subsidiary, Tembec SAS, closed the sale transaction with Paper Excellence B.V. for the acquisition of 100% of the shares of Tembec Saint-Gaudens SAS and Tembec Tarascon SAS, two subsidiaries of Tembec SAS. Paper Excellence B.V. paid EUR 66 million for the shares and assumed 34 million Euros of debt of the two European subsidiaries. Total consideration for the transaction is approximately EUR 100 million (C$133 million), which remains subject to closing working capital adjustments.

As a result of the sale, Tembec says it will record a gain of approximately C$20 million in its financial results for the quarter ending June 2010. The company intends to use the cash proceeds to pay down revolving operating debt and for general corporate purposes.