Norske Skog sells Tasman Kraft Pulp Business

KAWERAU – 26 March 2001
Norske Skog Australasia announced today that it has reached an agreement to sell its Kraft Pulp manufacturing business at Kawerau to Carter Holt Harvey.

Under the terms of the transaction, Carter Holt Harvey will make an initial payment of US$130 million on completion of the transaction. An additional payment of up to US$10 million will be payable depending on the development of global pulp prices over the next two years.

The deal has been approved by both the Carter Holt Harvey and the Norske Skog boards and been cleared by the New Zealand Commerce Commission. The completion of the transaction is scheduled for 30 April 2001.

Jan Reinas, Norske Skog CEO said, “The sale continues Norske Skog’s strategic focus on publication papers worldwide and our commitment to exit non-core activities. We remain on course for the rapid repayment of borrowings taken on to acquire Fletcher Challenge Paper last year.”

David Kirk, Norske Skog Australasia President added, “The Tasman Pulp business is very well run and performing well, however, it requires a separate operational focus. We believe the new owner has this focus, and a commitment to pulp manufacturing which will see Tasman Pulp realise its full potential.

“I wish to recognise the contribution of our pulp employees who have raised the performance of the business to be among the top 15% of all pulp mills worldwide. Carter Holt Harvey were impressed with our people and their involvement in the business and see this business culture continuing into the future.
“Carter Holt Harvey was a logical choice as new owner, given their involvement in wood harvesting and processing through added value chains throughout New Zealand, and particularly in the Eastern Bay of Plenty. There are significant synergies available to the two companies working together in New Zealand and we will be going after them immediately.”

Mark Oughton, Norske Skog Tasman Limited General Manager confirmed that the paper mill was outside the scope of the transaction.

Mr Oughton went on to say, “The future success of both businesses relies on the development and maintenance of a strong relationship between Norske Skog and Carter Holt Harvey given the integrated nature of our site. This will include some joint venture services with management representation from both companies. The synergies available to Norske Skog Tasman (NSTL) and Carter Holt Harvey are particularly in the areas of wood fibre supply, logistics, purchasing and stores management and the pursuit of best practices with respect to people and processes. We are excited by the opportunities for both companies.”

The Tasman Pulp business has a long-standing valuable customer base in New Zealand and Australia and it is expected that the new owners will want to build upon this.

In addition around 70% of the total kraft pulp produced at the Eastern Bay of Plenty site is exported. Kraft pulp is typically used in the production of quality printing paper, tissue and building products.

A joint NSTL and CHH integration team is now in place and will be working to ensure a smooth transition of the business to its new owner on 30 April 2001 with business as usual for employees, customers and suppliers.
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