Sappi announced that it has concluded an agreement with Aurelius regarding the divesture of its Maastricht Mill in the Netherlands, its Stockstadt Mill in Germany and its Kirkniemi Mill in Finland.
«We are very happy to have reached agreement with Aurelius to take ownership of the three mills. Although they no longer fit in Sappi’s portfolio, they are strong assets with good people» comments Steve Binnie, CEO of Sappi.
«The decision to sell these mills follows a detailed and thorough strategic review by Sappi in line with our group Thrive25 strategic focus. This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in segments including packaging and speciality papers, pulp and biomaterials. Recent investments across our South African, American and European operating businesses demonstrate this priority».
Sappi received binding offers from several parties. Following due process, the board of Sappi agreed to proceed with the offer from AURELIUS, a pan-European multi-asset manager group. The sale will be subject to various standard suspensive conditions. The sale is expected to close in the first calendar quarter of 2023 once all these conditions have been fulfilled. A transitional services agreement will also be entered into to ensure a smooth transition of the businesses between the parties.
The enterprise value of the sale amounts to approximately 272 million EUR. The consideration consists of cash proceeds and retained receivables (212 million EUR) as well as retained liabilities (60 million EUR). The proceeds will be used to reduce debt further and continue to increase Sappi’s focus on the identified growth segments. The net loss after tax attributable to the net assets of the three mills for the last twelve months ended 31 March 2022 was 6,5 million EUR. Given the current volatile market conditions the EBITDA for the same period for the three mills was 58 million EUR. «Going forward Sappi’s focus in Europe as regards graphic paper will be on the stronger commercial print market. In addition, in the packaging and specialities segment, the European business will predominantly focus on the flexible packaging, functional papers, self-adhesives, labels as well as dye-sublimation categories,» explains Marco Eikelenboom, CEO of Sappi Europe.
«“We believe this sale will help unlock potential value at each mill which would be best pursued by a new owner. Our strategic focus is on market segments not served by these mills».
«The market for pulp and paper products is of particular interest to AURELIUS considering our industrial sector expertise,» states Dirk Markus, founding partner of Aurelius. «This transaction offers ample opportunity to unleash the full potential of these production sites».
Sappi extends Austrian capacity but reduces Italian capacity
Sappi Europe has furthermore announced its intention to extend capacity at its mill Gratkorn, in Austria, while temporarily reducing capacity at its Carmignano plant in Italy.
The company says that production capacities for label papers will be extended at the Gratkorn mill «at the end of 2023».
The «double-digit million-euro» investment in technological innovations, such as a new embossing calendar, will enable the mill to produce high quality wet-strength wet-glue label paper that is used in the beverage industry, for instance on returnable beer bottles.
Extensive technical innovations in the paper machine’s water and material cycles are also planned.
«Our investment at Gratkorn underscores our strategy to establish Sappi as the leader within the label sector, adding to the supply of value adding products across our entire business,» says Eikelenboom.
Sappi said it has invested recently in new technical equipment and state-of-the-art production facilities at Gratkorn, ranging from paper machines to formatting equipment, and has transformed the production facility into a cutting-edge paper mill.
Meanwhile, the company said it has temporarily reduced capacity at its Carmignano mill in Italy due to the continuing and sharp escalation of energy costs. The mill produces label and packaging grades.
«The energy crisis adds to the already high costs for raw materials and transportation, presenting an extraordinary challenge not only for Sappi but also the industry as a whole,» declares Sappi in a press statement. Sappi said its European sales team will be in further contact directly with customers to discuss the details of the implementation.
Sappi Europe is a division of Sappi Ltd (JSE), headquartered in Johannesburg.