Sappi, which has seen costs rise sharply at its operations in Europe with the energy crisis, is selling three European graphic paper mills for €272 million (R4.73 billion), 31% lower than the net asset value of the loss-making plants.
Global demand for graphic papers has generally been in secular decline and Sappi’s strategy is to reduce exposure to graphic markets and align its business over time with falling market demand. Sappi’s share price spiked 3.65% to R46.81 yesterday morning.
Yesterday, the group said it would sell its Maastricht Mill in the Netherlands, the Stockstadt Mill in Germany and its Kirkniemi Mill in Finland to Aurelius Investment Lux One. Aurelius is a pan-European multi-asset manager group, with investments in business operating in various segments including industrial, IT, chemicals and business services.
“The board believes the transaction 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,” Sappi said in a statement yesterday.
It said it had received offers from several parties, and decided on an agreement with Aurelius.
The transaction is expected to close in the first quarter of 2023.
The €272m would comprise cash, receivables collections and liabilities.
The net asset value of the three mills as at March 31, 2022 was €396m. The audited taxed loss of the mills for the year ended March 31, 2022 was €6.5m.
Sappi directors said their strategy was to reduce exposure to the graphic paper segment, while increasing presence in the packaging and speciality papers, pulp and biomaterials segments.
“Recent investments across our South African, America and European operating businesses demonstrate this priority. Going forward, Sappi’s focus in Europe as regards graphic paper will be on the stronger commercial print market. As regards packaging and specialities in Europe, the focus will be on the flexible packaging, functional papers, self-adhesives including glassine, labels as well as dye-sublimation markets,” it said.
Sappi Maastricht Mill produces 260 000 tons per annum of coated wood-free paper and paperboard mainly sold to printers and packaging converters globally.
Sappi Stockstadt Mill in Germany produces 145 000 tons per annum of pulp which is used to produce 220 000 tons per annum of coated and uncoated woodfree paper mainly sold into the European print market.
Sappi Kirkniemi Mill in Finland produces 300 000 tons per annum of bleached mechanical pulp which is used to produce about 750 000 tons per annum of a variety of coated mechanical paper grades used in the print publication industry globally.
BUSINESS REPORT