Sappi Accepts Offer to Sell Three European Graphic Paper Mills for EUR 272 Million
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Sappi Limited announced that it has concluded an agreement with AURELIUS Investment Lux One S.à.r.l. ("AURELIUS") regarding the divesture of its Maastricht Mill in the Netherlands, its Stockstadt Mill in Germany and its Kirkniemi Mill in Finland (the "Transaction").
Steve Binnie, CEO of Sappi Limited commented: "We are very happy to have reached agreement with AURELIUS to take ownership of the three mills. Although they no longer fit in Sappi's portfolio, they are strong assets with good people.
"The decision to sell these mills follows a detailed and thorough strategic review by Sappi in line with our group Thrive25 strategic focus. This includes reducing exposure to the graphic paper segment while expanding Sappi's presence in segments including packaging and speciality papers, pulp and biomaterials. Recent investments across our South African, American and European operating businesses demonstrate this priority."
Sappi received binding offers from several parties. Following due process, the board of Sappi agreed to proceed with the offer from AURELIUS, a pan-European multi-asset manager group. The sale will be subject to various standard suspensive conditions. The sale is expected to close in the first calendar quarter of 2023 once all these conditions have been fulfilled. A transitional services agreement will also be entered into to ensure a smooth transition of the businesses between the parties.
The enterprise value of the sale amounts to approximately EUR 272 million. The consideration consists of cash proceeds and retained receivables (EUR 212 million) as well as retained liabilities (EUR 60 million). The proceeds will be used to reduce debt further and continue to increase Sappi's focus on the identified growth segments. The net loss after tax attributable to the net assets of the three mills for the last twelve months ended 31 March 2022 was EUR 6,5 million. Given the current volatile market conditions the EBITDA for the same period for the three mills was EUR 58 million. As a comparison, the EBITDA for the pre-Covid period of twelve months to September 2019 for the three mills was EUR 40 million.
Marco Eikelenboom, CEO of Sappi Europe explained: "Going forward Sappi's focus in Europe as regards graphic paper will be on the stronger commercial print market. In addition, in the packaging and specialities segment, the European business will predominantly focus on the flexible packaging, functional papers, self-adhesives including glassine, labels as well as dye-sublimation categories.
"We believe this sale will help unlock potential value at each mill which would be best pursued by a new owner. Our strategic focus is on market segments not served by these mills."
"The market for pulp and paper products is of particular interest to AURELIUS considering our industrial sector expertise. We combine a proven track record in complex carve-outs with a deep understanding of how to identify and unlock value creation potential. Given these key traits, this transaction offers ample opportunity to unleash the full potential of these production sites," states Dr. Dirk Markus, Founding Partner of AURELIUS.
The mills included in the sale:
Sappi Maastricht Mill produces 260,000 ton per annum (tpa) of coated woodfree paper and paperboard mainly sold to printers and packaging converters globally
Sappi Stockstadt Mill is an integrated pulp and paper mill located in Germany, producing 145,000 tpa of pulp which is used to produce 220,000 tpa of coated and uncoated woodfree paper mainly sold into the European print market.
Sappi Kirkniemi Mill is an integrated pulp and paper mill located in Finland, producing 300,000 tpa of bleached mechanical pulp which is used to produce approximately 750 000 tpa of a variety of coated mechanical paper grades used in the print publication industry globally.
