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Final Agreement Between AssiDoman and Frantschach.



Business Editors

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 MEUR Million Euros  550 (MSEK MSEK Meyer, Suozzi, English & Klein (New York law firm)
MSEK Million Swedish Kroner
 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 SEK

In currencies, this is the abbreviation for the Swedish Krona.

Notes:
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
 5.60 per share.

Since the transfer will be made with effect from 1 January 2000, the sold units' 2000 earnings will accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred.  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 Pal·me   , Olaf 1927-1986.

Swedish politician. As premier (1969-1976 and 1982-1986) he was widely respected for his efforts toward peace and disarmament. Palme was assassinated in 1986.
, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  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 EUR

In currencies, this is the abbreviation for the Euro.

Notes:
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
 3 billion. Production is concentrated on packaging paper, packaging and sawn timber products.

AssiDoman AB Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise.  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

Appendix 1

AssiDoman's future direction

AssiDoman's industrial operations will be focused on profitability and growth within Corrugated cor·ru·gate  
v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates

v.tr.
To shape into folds or parallel and alternating ridges and grooves.

v.intr.
 & Containerboard con·tain·er·board  
n.
A corrugated or solid cardboard used to make containers.
 (corrugated board Noun 1. corrugated board - cardboard with corrugations (can be glued to flat cardboard on one or both sides)
corrugated cardboard

cardboard, composition board - a stiff moderately thick paper
 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 Value Added

The enhancement a company gives its product or service before offering the product to customers.

Notes:
This can either increase the products price or value.
.

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 sawmill, installation or facility in which cut logs are sawed into standard-sized boards and timbers. The saws used in such an installation are generally of three types: the circular saw, which consists of a disk with teeth around its edge; the band saw, which  industry has been suffering from a fragmented frag·ment  
n.
1. A small part broken off or detached.

2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript.

3.
 structure and overcapacity o·ver·ca·pac·i·ty  
n.
Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. 
 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 A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation.  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


Appendix 3

Facts about the units included in the deal

AssiDoman Sacks

AssiDoman Sacks manufactures paper sacks which are used to pack building materials Building materials used in the construction industry to create .

These categories of materials and products are used by and construction project managers to specify the materials and methods used for .
 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

company.)

-- Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north.  (1): AssiDoman Sepap Sack , Steti.

-- France (3): AssiDoman Charfa Artois, Bethune; AssiDoman Charfa

Provence, Rousset; AssiDoman Charfa Alsace, Schweighouse Sur

Moder.

-- 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.

AssiDoman Dynas

(Vaja, Sweden)

Production capacity:

- unbleached sack and kraft paper: 220,000 tonnes

Number of employees: 390

AssiDoman SEPAP

(Steti, Czech Republic)

Production capacity:

sack and kraft paper: 149,000 tonnes

Linerboard lin·er·board  
n.
A type of paperboard used in making corrugated cartons.
: 65,000 tonnes

market pulp: 110,000 tonnes

Number of employees: 1,050

AssiDoman Barrier Coating

Barrier Coating processes paper, liner liner /lin·er/ (lin´er) material applied to the inside of the walls of a cavity or container for protection or insulation of the surface.

liner

see teat cup liner.
, cartonboard and other substrates by coating and laminating lam·i·nate  
v. lam·i·nat·ed, lam·i·nat·ing, lam·i·nates

v.tr.
1. To beat or compress into a thin plate or sheet.

2. To divide into thin layers.

3.
 with various types of polymers. This creates a barrier against grease grease, mixture of lubricant and thickener. It is used to reduce friction between surfaces from which oils would leak away or cause damage by dripping, or where lubrication must be assured for extended periods. Many greases are mixtures of mineral oil and soap. , moisture and gas diffusion diffusion, in chemistry, the spontaneous migration of substances from regions where their concentration is high to regions where their concentration is low. Diffusion is important in many life processes. .

Number of employees: 780

Plants: 7

-- Belgium (1): AssiDoman Belcoat, Duffel.

-- Czech Republic (1): AssiDoman Sepap-Barrier Coating, Steti.

-- France (2): AssiDoman Polykote, Oise; AssiDoman Polykote,

Gournay-en- bray

-- Germany (1): AssiDoman Inncoat, Raubling.

-- Sweden (2): AssiDoman Barrier Coating, Orebro; AssiDoman

Barrier Coating, Timra.

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