PaperlinX has completed the sale of its Australian manufacturing business, Australian Paper to Nippon Paper Group, reducing Australian Paper’s debt by $500m. As previously reported the sale excludes the two Tasmanian mills at Burnie and Wesley Vale, whose fates are yet to be decided.
The $600m intitail purchase price took place this week and in addition to the sale proceeds, PaperlinX will share in an earn-out arrangement that allows it to participate in positive earnings growth of the divested operations over the next three years.Tom Park, managing director of PaperlinX, says the divestment allows the company to concentrate on its core paper merchanting business. He adds that there has been continued deterioration across all markets during the year and this has impacted full year performance.
Park says, “PaperlinX is now moving from a period where we have had high internal demand for capital for the completion of the pulp mill at Maryvale, to a period where we expect to be able to further secure our future through tight working capital management and ongoing debt reduction.”
The company continues that a detailed operations review of the two Tasmanian mills at Burnie and Wesley Vale is expected to complete by the end of June with potential outcomes of the review including retention of the existing business, partial closure, closure or sale.
