International Paper to sell Chinese production facilities

International Paper, Memphis, Tennesee, reports it has entered into a definitive agreement with its Chinese coated board joint venture partner, Shandong Sun Holding Group Co. Ltd., to sell its 55 percent equity interest in the joint venture IP-Sun JV.

As consideration for the sale, the company will receive 149 million renminbi (approximately US$23 million) in cash. Additionally, the company will remove approximately $400 million of currently outstanding debt from the Company’s balance sheet, along with the other assets and liabilities of the IP-Sun JV, following completion of the transaction.

International Paper also announced that it is pursuing strategic options for its corrugated box business in China and South East Asia and has signed a nonbinding letter of intent with a prospective buyer based in China.

“International Paper undertook a thorough review of its position in serving the Chinese and Asian markets,” says Mark Sutton, International Paper chairman and CEO. “The company remains committed to serving these very important markets, but concluded we could be more effective supplying this region with globally competitive products primarily through our Ilim joint venture in Russia and from the U.S.”

The IP-Sun JV transaction is expected to be completed within the next six months, subject to satisfaction of closing conditions, including obtaining required Chinese governmental approvals.

IP says the joint venture will be deconsolidated from International Paper’s consolidated balance sheet following the completion of the sale.

The IP-Sun JV has one manufacturing location in Shandong Province in China, which includes four paper machines and approximately 1.4 million annual metric tons of coated board capacity. International Paper’s Industrial Packaging Asia business has 18 corrugated box plants in China and South East Asia and a workforce of approximately 3,000 employees.