UPM-Kymmene Corporation, The APRIL Group (Asia Pacific Resources International Holdings Ltd.) and APRIL's majority shareholder have today signed a definite Share Purchase Agreement to sell APRIL's 51% interest in the Changshu paper mill to UPM-Kymmene. The value of the transaction is USD 150 million. After the agreement UPM-Kymmene owns 100 per cent of the Changshu paper mill. The fine paper company's converting plant in Suzhou will be transferred to APRIL. The agreement requires approval from the relevant authorities.
At the same time it has been agreed upon that APRIL will enter into a six and half year pulp supply contract for the supply of Bleached Hardwood Kraft (BHK) pulp to the Changshu paper mill. APRIL will continue to hold an existing USD 121 million loan from UPM-Kymmene and the loan's new collateral is Riaupulp's shares that represent approximately 12 percent of the company's shares.
The Changshu paper mill is located on a 188 hectare site by the Yangtze River in Jiangsu Province, some 100 kilometers from Shanghai. The mill's paper machine, delivered by Valmet, has an annual capacity of 350,000 tonnes of uncoated fine paper. The paper machine and the sheeting facility started operating in March 1999. On the mill site there are significant supporting operations for a paper production. These comprise a 100 MW power plant as well as an own harbour, in which the transportations of raw-materials and finished paper products are handled. On the mill site there is room for several paper machines. Approximately USD 600 million has been invested, including working capital, into the paper mill integrate. The number of employees is 680.
UPM-Kymmene has had the management responsibility of the paper mill since the starting of the mill. The mill has operated technically well. During the year 2000 the estimated production of the mill will be about 290,000 tonnes of uncoated fine paper. Approximately 80 percent of the production is delivered to customers as cut-size and folio sheets. The amount of export is about a half and the exports go to the neighbouring areas of China.
The Changshu fine paper mill will become part of UPM-Kymmene Fine Division. After the transaction UPM-Kymmene's annual fine paper capacity will be 2,400,000 tonnes, of which approximately 1,400,000 tonnes are uncoated fine papers. The paper is being produced in Finland, Germany and China with modern paper machines.
After the acquisition UPM-Kymmene's equity ratio will be approximately 46.5 per cent (30 June, 2000: 49.1%). The Changshu paper mill will become a significant platform for UPM-Kymmene's strategy in Asia. The strong growth in paper consumption in China and elsewhere in Asia create favourable circumstances for further development of the Changshu paper mill.
UPM-Kymmene Group is one of the world's largest forest product companies and paper producers with annual sales in 1999 of EUR 8.3 billion. The company's product range covers printing papers (magazine papers, newsprint, fine papers), converting materials and special papers, based on company's own R&D, and wood products. The company has production plants in 15 countries and an extensive sales network. UPM-Kymmene's shares are quoted on the Helsinki and New York stock exchanges.
For more information, please contact:
Mr Martin Granholm, Executive Vice President, tel. +358 204 15 0004
Mr Olavi Kauppila, Vice President, Investor Relations, tel. +358 204 15 0658
23 August, 2000