Contrary to its earlier plans to close Follum permanently, Norske Skog has entered into an agreement to sell the site to Viken Skog. Furthermore, the Bio Bio mill in Chile will be sold for US$56m.
After the decision to close the mill at Follum, Norske Skog has now worked to find new stakeholders to create new activities on the site. The company will sell the mill to its largest shareholder Viken Skog. The total value of the transaction was not disclosed.
Back in November, Norske Skog was looking for alternatives to the closure of the Follum site have been investigated, but said no viable solutions could be found. Viken Skog, Norway’s largest forest owners cooperative, had placed a bid to acquire the Follum mill for NOK280m, but Norske Skog rejected the bid even after it was raised again in December.
Viken Skog plans to develop the Follum site into a forest fibre-based industry cluster and to start production of a number of products such as pulp, energy, biofuels or biochemicals. Paper production is to be retained and will serve as a bridge to access new business areas and markets, Viken Skog says.
Follum paper mill runs two paper machines and has 365 employees. The mill can churn out some 290,000 tpy of newsprint, book paper and coated mazine paper.
Norske Skog will discontinue production at Follum on Friday 30 March. The transaction is to be finanalised during the second quarter 2012.
Bio Bio to be sold to Group BO
To further improve the company’s cash flow and financial position, the Chilean mill in Bio Bio will be sold to Group BO, a consortium of Chilean investors, for US$56m Group BO plans to continue producing newsprint at the mill.
“We are very pleased to be able to sell the Chilean operations to an industrial player with long-term plans for the mill,” says Sven Ombudstvedt, president and CEO of Norske Skog.
The Bio Bio mill has a total newsprint production of approximately 125 000 tons, and is one of total four newsprint mills in South America.
The investors participating in Group BO are already partners in BO Packaging, which is one of the leading companies in the Chilean and Peruvian packaging business.
Closing of the transaction is expected to take place in second quarter.