UPM-Kymmene and APRIL to form a major alliance in European and Asian fine paper

Archive 12.9.1997 0:00 EEST

UPM-Kymmene of Finland and APRIL, the Singapore-based Asian Group, have agreed to establish a strategic alliance to develop jointly their respective fine paper operations in Europe and Asia. Under this alliance, UPM-Kymmene and APRIL, which is listed on the New York Stock Exchange, will swap 30% of their respective fine paper operations in a non-cash transaction.
In Europe, UPM-Kymmene will hold 70% and APRIL 30% of a new company, UPM-Kymmene Fine Paper, which will comprise UPM-Kymmene's fine paper units, Nordland Papier in Germany and Kymi in Finland. The new company is the largest fine paper producer in Europe with a combined annual capacity of 1.7 million tonnes of paper and 460,000 tonnes of related pulp.
Similarly, in Asia, APRIL will hold 70% and UPM-Kymmene 30% of a new company, APRIL Fine Paper, which will comprise APRIL's paper mills under construction in Sumatra, Indonesia and Changshu, near Shanghai, China. These mills are expected to come into production in 1997 and 1998 and will have a combined capacity of over one million tonnes of fine paper per annum. A large stationery plant in Suzhou, near Shanghai, will also be included. The parties intend to increase further the combined capacity of these two mills to two million tonnes per annum.
The agreement will enable UPM-Kymmene to gain immediate access to the rapidly expanding Asian fine paper market, where fine paper consumption is forecast to increase by three million tonnes by the turn of the century. APRIL will gain access to UPM-Kymmene's world-leading position in fine paper research, production know-how and marketing expertise, thereby ensuring the successful start-up and future performance of its Asian fine paper operations.
"We have moved from a European to global approach to our fine paper business", says Mr. Juha Niemelä, President and CEO of UPM-Kymmene. "We are taking a major step into the fast growing Asian markets. Fine paper, which is based on local low cost short-fiber pulp, will play a dominant role there and elsewhere. In addition, we expect the alliance to bring us considerable benefits in the Asian markets with other products as well."
The Chairman of APRIL, Mr. Sukanto Tanoto comments: "We have enjoyed a close and successful relationship with UPM-Kymmene for over fifteen years in our plywood business. The alliance between our two fine paper businesses represents a significant development in this rapidly growing sector of the paper industry towards a global market. APRIL brings its unique developing position in the dynamic Asian market, and UPM-Kymmene Fine Paper its leading position in Europe and its worldwide reputation. Hopefully we may find opportunities also to grow the business in Europe and stimulate the necessary consolidation of the sector. The alliance of our two businesses provides us with a very strong position worldwide."
The parties intend to implement the proposed alliance by year-end, after regulatory and other approvals have been received.
For further details:
Mr. Juha Niemelä, President and CEO, tel. +358 204 15 0001 (Helsinki)
Mr. Jan-Henrik Kulp, Chief Financial Officer, tel. +358 204 15 0012 (Helsinki)
Mr. Sukanto Tanoto, Chairman, tel. (mobile) +65 96 30 6951
Ms. Karen Scott, Vice President, Investor Relations, tel. +65 420 62 58
Notes to Editors:
APRIL is one of Asia's leading pulp and paper companies, producing paper pulp, dissolving pulp, viscose fibre and paper targeted mainly at the fast growing Asia Pacific market. APRIL is a NYSE listed company (symbol ARH) with a corporate administrative office in Singapore.
APRIL produces a total of almost one million tonnes of pulp per annum at its two mills in Sumatra, Indonesia. The Riau mill is the largest single-line pulp mill in the world, with a capacity of approximately 750,000 tonnes per annum, and increasing after an ongoing expansion program to two million tonnes.
APRIL is currently building a paper mill adjacent to its Riau pulp mill which will initially have two paper machines with a combined capacity of approximately 700,000 tonnes per annum of uncoated fine paper. In addition, APRIL is constructing a new paper mill near Shanghai, China, which will have an initial capacity of approximately 350,000 tonnes per annum of uncoated fine paper.
Recently, APRIL acquired Sateri Oy, formerly Kemira Fibres Oy in Valkeakoski, Finland, which together with its Indorayon dissolving pulp and rayon plant in Sumatra makes it one of the top five viscose fibre producers in the world.
In the past five years, APRIL has acquired approximately FIM 7 billion of pulp and paper equipment from major Finnish suppliers.
UPM-Kymmene is, in terms of turnover and market capitalization, Europe's biggest forest industry group, and in terms of production capacity, one of the world's largest paper manufacturers. UPM-Kymmene Corporation's shares are quoted on the Helsinki Stock Exchange in Finland and on SEAQ International in London.
Production operations are conducted by seven divisions: magazine papers (27% of turnover), newsprint (14%), fine papers (15%), packaging materials (12%), sawmilling (8%), plywood (7%) and special product companies (8%). UPM-Kymmene's paper divisions have a global marketing network.
UPM-Kymmene has two fine paper units: Nordland Papier, producing one million tonnes in Germany, and Kymi, which produces approximately 700,000 tonnes per annum in Finland. The Group produces both coated and uncoated fine papers and is the biggest manufacturer of these grades in Europe, which is its main market. Customers are paper merchants and office supplies wholesalers, printers and converters.
Fine paper is used for printing and writing and is made from bleached chemical pulp. Uncoated fine paper (also called uncoated freesheet or uncoated woodfree paper) is used for photocopying and reproduction purposes. Coated fine paper (also called coated freesheet or coated woodfree) is usually used where higher quality colour reproduction is important, such as for marketing materials and annual reports.