Final Agreement Between AssiDoman and Frantschach.
STOCKHOLM, Sweden--(BUSINESS WIRE)--May 16, 2000
AssiDoman AB and Frantschach AG have signed an agreement on the sale of AssiDoman's sack operations, the Sepap and Dynas paper mills, and the Barrier Coating business unit.
Frantschach will take over these operations with effect from 1 January 2000. The deal is subject to approval by the EU competition authorities and is expected to be finalised by payment of the purchase price in the second half of this year.
The total purchase price is between MEUR 550 (MSEK 4,543) and MEUR 565 (MSEK 4,660) before deduction for interest-bearing liabilities, depending on the earnings trend in the sold units (earn out).
The deal itself is expected to have an impact on profit after net financial items of approximately MSEK 180. In addition, positive tax effects of approximately MSEK 485 are expected, among other things due to previous losses. Taken together, the positive effect on the profit in 2000 will be approximately MSEK 665, corresponding to SEK 5.60 per share.
Since the transfer will be made with effect from 1 January 2000, the sold units' 2000 earnings will accrue to the purchaser. Until this transaction is completed, the sold units will be included in AssiDoman's accounts as previously.
"This agreement marks a major step in the implementation of our strategy to concentrate operations and focus on those segments where AssiDoman has a competitive structure and is able to build up and defend a leading position and create shareholder value," says Gunnar Palme, President and CEO of AssiDoman.
The Group's capital structure
AssiDoman conducts regular reviews of the Group's capital structure in order to have a well-balanced balance sheet. The intention is to transfer most of the proceeds from the sale to Frantschach to shareholders in autumn 2000, once the deal has been completed and payment received. The transfer lies within the limits of what is judged possible in view of limitations in AssiDoman's balance sheet as regards available unrestricted equity, and reasonable in view of development plans for the remaining units.
Advisors to AssiDoman in this deal have been Landsdowne Capital and Carnegie.
AssiDoman is one of Europe's leading forest products companies with 17,000 employees and an annual turnover of EUR 3 billion. Production is concentrated on packaging paper, packaging and sawn timber products.
AssiDoman AB Corporate Communications 16 May 2000
Appendix 1 AssiDoman's future direction
Appendix 2 Financial facts for units being sold
Appendix 3 Facts about the units included in the deal
AssiDoman's future direction
AssiDoman's industrial operations will be focused on profitability and growth within Corrugated & Containerboard (corrugated board and containerboard). As the third largest supplier of corrugated board and containerboard in Europe, AssiDoman has a strong position with excellent opportunities to further strengthen its position. Market share is currently just over six per cent and the aim is to exceed ten per cent. The strategy is to grow and strengthen positions in selected markets and to raise market share in profitable segments with a high value added.
AssiDoman needs to improve the balance between recycled-fibre based and virgin-fibre based paper and to increase the integration between containerboard and corrugated board. The necessary growth within Corrugated & Containerboard will take place organically or through acquisitions.
The pulp and paper mills Karlsborg and Skarblacka have strong positions, among other things, in white, high-grade packaging paper. Opportunities for product and market development are good and there are several development options with regard to both grades and market segments. AssiDoman is open to co-operation with other companies in order to further strengthen competitiveness.
AssiDoman Timber is Sweden's largest producer of sawn timber. The sawmill industry has been suffering from a fragmented structure and overcapacity for many years. Profitability is unsatisfactory and there is an urgent need for consolidation. In addition to further work with profitability and efficiency, AssiDoman also intends to play an active role in efforts to build stronger structures in this sector.
AssiDoman's forest assets are a resource with significant cash flows and large values that must be better reflected in valuations of the company. The Group is currently assessing the advantages and disadvantages of keeping the forestry and industrial organisations together in the same structure, or whether a separate listed industrial company and pure-play forest company respectively can provide greater shareholder value.
The evaluation of AssiDoman's future structure includes an analysis of an appropriate future capital structure and financial targets.
The sale of business unit Cartonboard was initiated at the end of 1999. The sales process is expected to be finalised before summer.
Appendix 2 Units being sold Profit and Loss Account Of which Barrier Coating, Sacks, AssiDoman Dynas, Sepap Group % of January-March 2000 MSEK MSEK Total Group External sales 6 560 1 546 24 Operating expenses -5 426 -1 302 24 Depreciation -446 -99 22 Operating profit 688 145 21 January-March 1999 External sales 5 947 1 326 22 Operating expenses -5 141 -1 199 23 Depreciation -501 -121 24 Operating profit 305 6 2 Full year 1999 External sales 24 497 5 502 22 Operating expenses -21 195 -4 994 24 Depreciation -1 963 -472 24 Operating profit 1 339 36 3 Full year 1998 External sales 23 993 5 756 24 Operating expenses -20 565 -5 237 25 Depreciation -1 850 -443 24 Operating profit 1 578 76 5 Full year 1997 External sales 20 725 5 649 27 Operating expenses -17 359 -5 210 30 Depreciation -1 521 -406 27 Operating profit 1 845 33 2 Assets and Liabilities Of which Barrier Coating, Sacks, AssiDoman Dynas, Sepap Group % of 31 March 2000 MSEK MSEK Total Group Fixed assets, non-interest- 20 452 3 716 18 bearing Stocks 2 859 711 25 Non-interest-bearing current 5 840 1 192 20 receivables, external Liabilities and Provisions, non- 7 236 1 115 15 interest-bearing, external Cash flow Of which Barrier Coating, Sacks, AssiDoman Dynas, Sepap Group % of January-March 2000 MSEK MSEK Total Group Operating surplus 1 113 244 22 -- Before write-down of MSEK 1 540
Facts about the units included in the deal
AssiDoman Sacks manufactures paper sacks which are used to pack building materials and other products. Other significant market segments are the food and chemical industries. AssiDoman Sacks is the second-largest sack producer in Europe.
Capacity, million sacks: 900
Number of employees: 1,650
Sack plants: 15
-- Belgium (2): AssiDoman S&M, Vilvoorde (to be closed 30 June
2000); AssiDoman Multisac, Poperinge.
-- Croatia (1): Ekovreca, Valpovo. (AssiDoman owns 65% of the
-- Czech Republic (1): AssiDoman Sepap Sack , Steti.
-- France (3): AssiDoman Charfa Artois, Bethune; AssiDoman Charfa
Provence, Rousset; AssiDoman Charfa Alsace, Schweighouse Sur
-- Germany (2): AssiDoman Herkules, Sendenhorst; AssiDoman
Herkules (Werk Goslar), Goslar.
-- Italy (3): AssiDoman Natro Cellulosa, Romano di
Lombardia/Bergamo; AssiDoman Natro Cellulosa, Volla/Napoli;
AssiDoman Natro Cellulosa, Misterbianco/Catania.
-- Norway (1): AssiDoman Scandisack, Moss.
-- UK (2): AssiDoman Sacks, Aylesford; AssiDoman Sacks, Hull.
- unbleached sack and kraft paper: 220,000 tonnes
Number of employees: 390
(Steti, Czech Republic)
sack and kraft paper: 149,000 tonnes
Linerboard: 65,000 tonnes
market pulp: 110,000 tonnes
Number of employees: 1,050
AssiDoman Barrier Coating
Barrier Coating processes paper, liner, cartonboard and other substrates by coating and laminating with various types of polymers. This creates a barrier against grease, moisture and gas diffusion.
Number of employees: 780
-- Belgium (1): AssiDoman Belcoat, Duffel.
-- Czech Republic (1): AssiDoman Sepap-Barrier Coating, Steti.
-- France (2): AssiDoman Polykote, Oise; AssiDoman Polykote,
-- Germany (1): AssiDoman Inncoat, Raubling.
-- Sweden (2): AssiDoman Barrier Coating, Orebro; AssiDoman
Barrier Coating, Timra.
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The following files are available for download: http://www.bit.se/bitonline/2000/05/16/20000516BIT00070/bit0001.doc http://www.bit.se/bitonline/2000/05/16/20000516BIT00070/bit0002.pdf