UPM-Kymmene to acquire interest in APRIL's China-based operations with USD 235 million investment

Final agreement on fine paper alliance will accelerate completion of mill projects
UPM-Kymmene Corporation and the Singapore-based APRIL Group (Asia Pacific Resources International Holdings Ltd.) have reaffirmed their strategic alliance aimed at joint development of their Asian and European fine paper operations.
In addition, the companies have agreed that UPM-Kymmene will make a USD 235 million investment into APRIL´s fine paper mill in China with the right to convert it into a 30% interest in APRIL´s Riau pulp mill.
UPM-Kymmene will make a USD 114 million equity investment in China in the fine paper and stationery company Asia Pacific Forest Products (Suzhou) Pte. Ltd., (A.P. Suzhou), as a result of which UPM-Kymmene will own 49 % of the company´s shares. In addition to this equity investment, UPM-Kymmene will contribute USD 121 million in the form of a shareholder loan to the China project. UPM-Kymmene will also assume responsibility for operating the paper mill under a management contract. UPM-Kymmene has the right to convert the equity investment and the loan into a 30% stake in APRIL´s Riau pulp mill at a later stage.
This arrangement ensures that the finer paper mill in China will be completed early 1999. In addition, APRIL will also be able to release some of its funds invested in China, and in this way secure a debottlenecking of the Riau pulp mill to a capacity of 1 million tons a year and will accelerate construction of the second 350,000 t/a fine paper machine at the Riau site. The first paper machine will start up in April 1998.
As previously agreed, the companies will swap 30 % of their respective fine paper operations in a non-cash transaction, when APRIL´s three fine paper machines in Indonesia and China are in commercial operation. This is expected to be completed in the third quarter of 1999.
Note to the Editors:
APRIL is presently producing a total of nearly one million tons of chemical pulp in its two mills in Sumatra, Indonesia. With a capacity of 750,000 tons a year, Riau mill is the world´s biggest single-line chemical pulp mill.
APRIL is at present building a fine paper mill in connection with the Riau pulp mill, which will have two paper machines together producing about 700,000 tons a year of uncoated fine paper. Of these two machines, PM 1 will be started up within about one month. In addition, APRIL is building a new paper mill in Changshu near Shangai in China, which will have a capacity of about 350,000 tons a year of uncoated fine paper. Apart from these paper mills, the APRIL Fine Paper company also incorporates a large stationery plant in Suzhou, China.
The UPM-Kymmene Fine Paper company comprises two production units: Nordland Papier in Germany, with a capacity of one million tons of paper a year, and Kymi Paper in Finland, with a capacity of about 700,000 tons of paper and 460,000 tons of chemical pulp a year. The company manufactures both coated and uncoated fine paper, and is the biggest manufacturer of these grades in Europe - Its most important market area.