Norske Skog to sell Hebei mill in China

   Moscow. Sep 24, 2009. /Lesprom Network/. Norske Skog has entered into an agreement with Chinese Shandong Huatai Paper to sell Norske Skog Hebei mill in Zhaoxian, China. The price is around NOK 800 million ($139 million), Papernet reported.

The divestment of the Hebei mill, built by Norske Skog and inaugurated only 4 years ago, will reduce Norske Skog's net debt by around NOK 800 million ($139 million), while freeing up resources to strengthen the effort to improve profitability at Norske Skog's other mills.

"In spite of hard work for several years we have not managed to turn a profit in China. In June this year, we announced the sale of our mill in Shanghai. With the sale of Hebei mill, Norske Skog is no longer producing paper in China. The sale of the Hebei mill is a continuation of our effort to reduce Norske Skog's net debt and improve profitability," says Christian Rynning-Tønnesen, CEO of Norske Skog.

Norske Skog Hebei has a production capacity of 330 thousand tons of newsprint. There are about 250 employees at the mill.

Norske Skog's pro forma net debt after the transaction will be NOK 11.4 billion ($1.9 billion), down from 12.2 billion ($2.1 billion) after the 2Q 2009, while gearing will be marginally improved. The sale entails an accounting loss of around NOK 650 million ($113 million).