 The company Norske Skog has concluded an agreement with the Chinese company Shandong Huatai Paper about selling its newsprint plant in Hebei in China. As a result of this transaction Norske Skog's net liabilities will be reduced by about 800 million NOK (96,4 million euro). Resources will be available for investments for improving profitability in Norske Skog's other production plants.
Mr Christian Rynning-Tönnesen, group manager in Norske Skog, says that the company has not managed to make a profit from its business in China. In June we published the sale of our plant in Shanghai. When the Hebei plant is sold Norske Skog will no longer have any production of paper in China. This sale constitutes one part of our operations for the purpose of reducing Norske Skog's liabilities and of improving profitability.
The Hebei plant's newsprint production capacity is 330.000 tons. The plant has about 250 employees.
The Company's pro forma net liabilities after this transaction will be reduced to 11,4 billion NOK (1,37 billion euro) from 12,2 billion NOK (1,47 billion euro) at the end of the second quarter this year. There will be a marginal improvement of the Company's debt ratio. As a consequence of the sale the Company will suffer an imputed loss of about 650 million NOK (78,3 million euro).
A prerequisite of the transaction is the approval of the Chinese authorities. The transaction will presumably be completed before the end of the year 2009. The imputed effects will be entered in the accounts for the third quarter in 2009. A more detailed report will be published in connection with the presentation of the Company's results for the third quarter of 2009.
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