Fine paper alliance between APRIL and UPM-Kymmene

Archive 16.9.1999 0:00 EEST

In 1997, APRIL and UPM-Kymmene announced plans to create a global fine paper alliance through the planned swap of 30% of their respective fine paper operations. The exchange was subject to certain conditions. The continuing Asian financial difficulties and developments in Indonesia prevented such conditions from being met by APRIL. As a result, APRIL and UPM-Kymmene announced on 16 April, 1999 that the Share Exchange Agreement as originally contemplated would not be implemented. However, the parties agreed to continue discussions of alternate plans to further the alliance.
Parties were not able to conclude a new alliance agreement. Today's announcement effectively brings to an end the share swap plan and broader international alliance as originally planned.
APRIL and UPM-Kymmene continue to have significant relationships as a result of agreements entered into as part of the former alliance. Specifically:
- APRIL and UPM-Kymmene will continue as joint-venture partners of Asia Pacific Forest Products (Suzhou) Pte. Ltd. including UPM-Kymmene's management responsibility in accordance with the terms of a subsisting shareholders' agreement. The Company operates a fine paper mill in Changshu and a stationery plant in Suzhou, both near Shanghai, China. UPM-Kymmene holds 49% and APRIL and its affiliate shareholder 51% of the equity in this joint venture.
- Additionally, APRIL holds a USD 121 million loan from UPM-Kymmene which may be converted into an equity stake in Riaupulp at net asset value until 31 December, 1999. Should UPM-Kymmene elect not to exercise this option, the loan will continue on a non-convertible basis until 31 December, 2001, carrying interest at commercial rates. As collateral for the loan APRIL has provided their 49% share of the Asia Pacific Forest Products (Suzhou) Pte. Ltd.
For further details:
Mr. Martin Granholm, Executive Vice President,
tel. +358 204 15 0004