The sale is part of Norske Skog's strategy to improve its cash flow and financial position. The company noted that profitability at Parenco has been a challenge for a long time, and it has considered both sale and closure of the mill. "We are very pleased to be able to sell to a company with long-term plans for the overall operations at Parenco," said Norske Skog President and CEO Sven Ombudstvedt.
Harmen Geerts, partner at H2 Equity Partners, said that "we are happy to bring the good news that this company, with its 100 years of history, can continue to operate. It is a good, well positioned paper mill, with well-motivated, expert staff, modern equipment, and it is geographically well situated. The sourcing of raw material from Reparco adds strategic value. We see good growth opportunities for Parenco, mainly driven by the substitution to higher quality magazine paper grades as well as the on-going growth in relevant publishing segments such as door-to-door retail folders. It is our ambition to create a healthy company with high quality, sustainable products, and a defendable market position, in line with the overall mission of H2 Equity Partners to build better businesses."
Deliveries to existing customers will be effectuated according to current agreements. H2 will establish a commercial team and network of sales agents at Parenco, as the current Norske Skog sales organization only will support Parenco for a limited time. The transaction will have little operational impact on the rest of Norske Skog, which will remain a significant producer of newsprint and magazine paper in Europe with production facilities in Norway, Germany, France, and Austria.
Parenco currently operates one of its two paper machines. H2 said it will look into new markets that may be served with the now idle second paper machine. This market orientation will take six to twelve months. However, should there be no viable future for operating a second machine, the machinery would remain idle, and Parenco would restructure the organization to align current staffing with market conditions. H2 has secured support for its approach from both the works council and the trade unions.
The sale, to be finalized and recognized in the third quarter of 2012, is subject to merger control approval in the Netherlands. The works councils of Parenco and Reparco have already given positive advice on the sale to H2.
H2 will appoint Frans Versteeg, an experienced senior executive currently acting as Parenco's interim GM, as the new managing director of Parenco. Kurt Martens will stay on as managing director of Reparco.
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