Paperlinx Sells Italian Business, Funds Restructuring
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PaperlinX, Victoria, Australia, reports that it has agreed to sell its Italian business, Polyedra, to Lecta, a European paper manufacturer for EUR 45 million. The purchase price represents more than 90% of book value and, after transaction costs and repayment of related debt in Italy, is expected to release approximately EUR 13 million in net proceeds. Polyedra contributed EBITDA of EUR 4 million in the 12-month period ending December 2011. The sale is expected to close within 90 days, subject to regulatory approvals and a final value audit.
PaperlinX CEO Toby Marchant noted that "we achieved fair value in today's market from a strategic investor and, importantly, generated a substantial portion of the A$20 million cash required to immediately implement the restructuring of Continental Europe and Corporate Head Office."
The multi phase restructuring of PaperlinX's business was a headline issue in the company's Interim Results announcement on February 23. The company expects savings of A$61 million by FY2014 from the ongoing restructuring program.
"Given the continued uncertainty of world paper markets, aggressive cost reduction is our most important initiative for the next two years. Every 1% reduction in our cost to sales ratio represents some A$40 million. We are aiming for a 3% total cost reduction, half of which will be generated from the current plans by FY2014," Marchant said.
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