Norske Skog has entered into an agreement to sell its Parenco paper mill in Renkum, Netherlands, and its global recovered paper business, Reparco, to the investment firm H2 Equity Partners. According to Norske Skog, the company will receive €30 million (US$37.228 million) through the sale.
“The sale is part of our strategy to improve Norske Skog's cash flow and financial position,” says Sven Ombudstvedt, Norske Skog president and CEO. “Profitability at Parenco has been a challenge for a long time, and we have 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.”
Harmen Geerts, a partner at H2 Equity Partners, says, “We are happy that we can 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.” He adds, “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 ongoing 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.”
Parenco currently operates one of its two paper machines at the mill. The other machine has been idled because of soft market conditions. H2 says it will look into new markets that may be served with its idled second paper machine. The market orientation will take between 6 to 12 months. However, H2 adds, should there be no viable future for operating a second machine, the machinery will remain idle, and Parenco will restructure the organization to align current staffing with market conditions. H2 says it has secured support for its approach from both the works council and the trade unions.
The sale is expected to be complete by the third quarter of 2012.
H2 will appoint Frans Versteeg, currently Parenco's interim general manager, as the new managing director of Parenco. Kurt Martens will stay on as managing director of Reparco.
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