M-real Planning to Partially Divest Reflex Mill

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M-real Corporation, part of Metsäliitto Group, Finland, this week agreed to divest part of its Reflex mill in Finland to Metsä Tissue Corp., also a part of Metsäliitto Group, for approximately EUR 10 million. The planned divestment includes PM 5 and related real estate as well as certain infrastructure assets. Metsä Tissue is planning to convert the paper machine to grades that are not competing with M-real's grades. Based on preliminary plans, Metsä Tissue would employ about 50 employees, reducing the corresponding amount of redundancies as earlier agreed at the Reflex site.

If the transaction is consummated as planned, M-real books a positive EUR 15 million non-recurring item in Speciality Papers business area's operating result related to the transaction proceeds and the partial reversal of earlier announced personnel cost provisions. Cash impact would be approximately EUR 10 million positive, taking into account certain investments needed in the Premium Papers production at the site. The transaction is expected to be closed during the fourth quarter of this year. M-real will continue to further develop the paper park concept at Reflex.

M-real had announced this past May 21 that the Reflex mill will be developed based on a paper park concept and that the target is to find industrial partnerships and thus create new jobs at the mill site. At the same time, it was announced that negotiations to reduce M-real Zanders mills' headcount by 220 were finalized and the Speciality Papers business area's second quarter operating results would include an approximately EUR 16 million non-recurring cost provision.