Segezha waits for decision

The Russian paper producer, Segezhabumprom, has been given a new lease of life following a court decision to give the company one year to restructure.

The Karelian government filed for bankruptcy in June, which left the courts to decide whether to sell off the assets or restructure the company.

The court acted in line with Russian bankruptcy proceedings by taking into account a recommendation from creditors who favored a restructure.

A potential problem with this option is that more capital will have to be injected into Segezhabumprom. In the past, AssiDomän provided the much-needed financing. But since AssiDomän's decision to withdraw from the Russian operation, the company has made it clear that it will not provide any more funds. It is not obvious who will provide the necessary financing to restructure.

But Segezhabumprom has been given 12 months to sort itself out - twice as long as what one expert had considered a likely timeframe.

AssiDomän holds a 57% stake through its subsidiary, Stratton Paper, while the Karelian government has a 20% stake via the State Property Fund. The Russian distribution company, Upak, controls 10% and the remaining shares are owned by small investors.

Legality questioned: The investigation into Stratton Paper's acquisition of shares in Segezha is proceeding slowly.

Earlier this year, an arbitration court in Moscow declared Stratton's original permission to acquire the shares illegal,
casting doubt over AssiDomän's ownership rights.

Little progress has been made since then, but AssiDomän is still determined to sell and wipe its hands of the whole affair.

Volga launches last PM

Russia's Volga newsprint mill has restarted its last machine, PM 7. Average production on the PM is 260-270 tons/day, which is targeted at the domestic market.The machine was originally due to come back on stream in mid-May, but was delayed due to a lack of orders. The latest startup brings the mill's total newsprint capacity up to 1,600 tons/day on five PMs.

Comceh seeks investors for a cash injection cure

Comceh is looking for strategic investors for its mill in Calarasi, Romania, as part of a major privatization drive in the country's pulp and paper sector. The State Ownership Fund has announced that its 40% stake in the mill is up for grabs.

If Comceh is successful in attracting investor interest, the company hopes to carry out ambitious expansion plans.

Comceh has three printing/writing PMs, each with a 22,000 ton/yr capacity. At present, only the coated paper PM 1 is in action. The mill plans to upgrade the PM to produce double coated, label and copy papers.

The mill also hopes to restart PM 2, but it needs to find the necessary raw materials. PM 3 is mothballed for the foreseeable future.

The overhaul of a 4,000 ton/yr toilet paper PM is also on the agenda. The expansion project would include the installation of converting facilities and a packaging line at the company's tissue plant.

Comceh also has a pulp mill on site. Neither the 42,000 ton/yr straw/reed line, nor the 20,000 ton/yr wood pulp line are in operation. But the capital generated by the privatization program should help matters.

Viking expands tissue production

Viking has ordered a new 27,000 ton/yr tissue PM for its mill in Aliaga, 70 km north of Izmir on the west coast of Turkey. The Valmet machine is due to be delivered by the end of the year, with startup scheduled for May 1999.

The investment also includes a deinking line from Comer and a slitter rewinder from Celli.

The $25 million project is being partly financed by a loan from the International Finance Corporation (IFC), with the remainder coming from internal funds.

Viking plans to exploit Turkey's fast-growing tissue market which is expanding at 10-15%/yr. The mill invested in a tissue converting line a few years ago and the latest investment will allow further integration. Some of the new PM's output will be sold as converted products and the remainder as reels.

The mill already has one 22,000 ton/yr machine which can produce machine-glazed or tissue paper.

Saudi goes for 3rd PM

Saudi Paper Manufacturing has ordered a third tissue machine for its mill in Dammam. The new 85 ton/day PM will produce mainly facial tissue.

Recard will install the crescent former PM, a rewinder and two stock preparation lines - one for short fiber, the other for long fiber. The PM will run at a design speed of 1,500 m/min.

Recard hopes to deliver the machine in seven to eight months and startup is pencilled in for September 1999.

Saudi Paper Manufacturing already operates two Recard tissue PMs with a combined capacity of 160 tons/day.

Oji keeps an eye on AA

Oji Paper looks likely to take a stake in the Thai company, Advance Agro (AA). Although Oji has denied that it has come to any specific arrangement as yet, discussions are taking place between the two companies.

A spokesman said that "equity participation" in AA has always been a possibility and stressed that it has enjoyed a good working relationship with Advance Agro for several years.

Oji Paper has started commercial production at its new 30,000 ton/yr carbonless copy paper mill in Prachinburi, Thailand. Advance Agro (AA) was originally lined up as a partner in the project, but pulled out at the end of last year as a result of the Asian financial crisis. AA still has some involvement though, as it is supplying Oji Paper Thailand with base paper. A spokesman for Oji said that more than 60% of the mill's output will go for export. The company is targeting Australia, Hong Kong and mainland China as its chief markets.

Thumbs up given for newsprint giant

A new newsprint giant has been created in the Asia-Pacific region as the boards of Abitibi-Consolidated (A-C), Norske Skog and Hansol approved the creation of a new joint venture grouping.The companies will each take a one-third stake in the joint venture, which will cover mechanical paper operations and sales across the Asia-Pacific region.The definitive shareholder agreement has been signed and the transaction should be finalized later this year.

The joint venture also includes a cross-marketing component. Volumes exported to Asia by A-C and Norske Skog will be sold by the jv, while A-C will sell all tonnage sent to North America. Norske Skog will sell the European, Middle Eastern and African exports.

The joint venture is to be financed with non-recourse debt. The group's initial debt to capitalization ratio is expected to be some 60%, with each partner contributing $172 million of equity on closure. Under the terms of the deal, the joint venture will buy Hansol's Korean and Chinese newsprint businesses and Norske Skog's newsprint operations in Korea and Thailand for $970/ton. The mills will give the joint venture a capacity of more than 1.4 million tons/yr, a market share of 15% in the Asia-Pacific region and a 40% market share in Asia, excluding Japan.

The new company will own: 100% of Hansol's 1,000,000 ton/yr Chonju mill in Korea; 53% of Hansol's 125,000 ton/yr Shanghai mill in China; 100% of Norske Skog's 180,000 ton/yr Chong Won mill in Korea; and 75% of Norske Skog's 120,000 ton/yr mill in Thailand.

Long Chen invests in PM

Long Chen in Taiwan has ordered a new 300 ton/day corrugating materials machine for one of its mills in Jiangsu province, China. The supplier is another Taiwanese company, Yuv Li. Delivery is scheduled for the end of 1998 and startup is expected early next year.

Long Chen already has a PM at the site, which produces 150 tons/day of liner and fluting. The mill is a joint venture between Long Chen and a local company, Long Dar.

Long Chen is still evaluating plans to invest in a converting plant for the mill.

Zhuhai buys board PM

Zhuhai Hongta Renheng Paper has ordered a new board machine for its Zhuhai mill in China. PM 2 will have a capacity of 150,000 tons/yr of coated board and liquid
packaging board, with a basis weight range of 150-310 g/m2.

The machine has a wire width of 4.8 m and a design speed of 600 m/min. The multi-fourdrinier machine features a shoe press, online coating and a soft calender.

Voith Sulzer will supply the PM, which is scheduled to start up at the end of 1999. The machine builder supplied Zhuhai's 50,000 ton/yr PM 1 in 1993.

Visy changes course

Visy Industries has again changed its plans to build an integrated pulp and kraftliner mill in New South Wales, Australia.

The proposed capacity has been scaled back to 180,000 tons/yr from 300,000 tons/yr, reducing the investment required from A$450 million ($255 million) to A$400 million.

The company previously said it would confirm in September whether or not the project would go ahead, but a final decision has still not been made. Visy Industries is waiting for the details of a federal government incentive package for the project. Federal elections were expected to delay the process even further.

Amcor launches PM

Amcor Paper has started up a new 160,000 ton/yr fine paper machine ahead of schedule at its Maryvale mill in Victoria. Beloit Walmsley supplied the A$330 million PM which will mainly produce copy paper.

The company also completed an expansion at its Wesley Vale mill in Tasmania.

VCP starts up coater

Votorantim Celulose e Papel (VCP) has started up a new coater at its Piracicaba mill in São Paulo state.

VCP rebuilt an uncoated woodfree PM at the mill as part of the work to install the 100,000 ton/yr coater. About 50,000 tons/yr of the output will be coated woodfree paper, with the remainder being specialty coated papers.

The new production is mainly destined for the domestic market, but some tonnage will be exported to other South American countries.

The Piracicaba mill has a further 45,000 ton/yr capacity of thermal and carbonless paper.

VCP also has 75,000 tons/yr of coated paper capacity at its Jacarei mill. When the coater comes on stream at Piracicaba, VCP's total coated paper capacity will rise to 175,000 tons/yr.

Klabin invests

at Monte Alegre

Klabin is installing a new on-line coater on PM 7 at its Monte Alegre mill in Brazil. The coater will boost the machine's 800 ton/day capacity of packaging papers, carrier and folding boxboard.

The project is part of Klabin's $200 million investment plan at the mill. The coater will be installed in May 1999 during the mill's annual shutdown.

Klabin is considering further changes at the mill. PM 4 looks likely to be upgraded to increase liquid packaging board capacity, while PM 6's 130,000 ton/yr newsprint output may be changed to a more profitable product.

DIP groups merge

Great Lakes Pulp and American Fiber Resources have merged their operations into a new holding company. Both units came under the control of Cerberus Partners and Oaktree Capital following financial troubles in 1997. The two deinked market pulp producers were forced to file for protective bankruptcy, but are now back on their feet thanks to an extensive restructuring plan.

Egypt privatizes its National Paper Company

The state-owned Egyptian group, National Paper Company, is up for grabs. Some 90% of the company's shares are being sold off as part of the Egyptian government's privatization program. The remaining 10% will be reserved for company employees.

The company is located in El-Tabia near Alexandria and has a design capacity of 124,250 tons/yr on six machines, although the mill is currently running at around 50,000 tons/yr. The product range includes kraft paper, fluting, kraftliner, carton and duplex grades, as well as printing/writing papers.

Since 1995, the company has been hit by declining sales and operating profits, mainly due to increased competition from higher quality imports.

Difficult market conditions have prompted National Paper Company to take steps to control the fall in earnings.

The US consultant, Jacobs-Sirrine Engineers, was appointed to review the company's facilities. The consultant's report confirmed the potential for a turnaround of existing operations. Arthur Andersen was chosen to lead the privatization project.

National Paper Company is a fully-owned affiliate of Chemicals Holding Company, which is 100% government-owned.

AssiDomän aims for a big expansion at Piteå mill

AssiDomän's kraftliner division has applied for an environmental permit to boost capacity to 700,000 tons/yr at its Lövholmen mill in Piteå, Sweden.

The company has ambitious plans for the 600,000 ton/yr mill, but details are still being hammered out. Ideally, the mill would like to install a new PM, but it is more likely to rebuild existing machines, a spokesman said. Rebuilds would account for 60,000 tons/yr of the proposed increase.

The mill already decided to rebuild its white-top liner PM 2 in 1999. This project will boost capacity by 40,000 tons/yr.

AssiDomän is confident it will obtain the permit, but the company is cautious about adding capacity at the mill due to global economic problems. The application process is expected to take one year to complete.

The mill is already in the throes of a major pulp expansion. New pulp washing equipment is set to increase softwood pulp capacity from 800 tons/day to 1,300 tons/day on the mill's largest line.

Södra gets green light

Södra has received a long-awaited environmental permit allowing the company to raise pulp capacity at its Mönsterås mill from 550,000 tons/yr to 750,000 tons/yr. The news means that Södra can go ahead with a SEK 1,500 million ($189 million) investment program.

The environmental authorities insisted on much tougher controls than Södra expected, especially for water and air emissions. But the company said it would be able to meet the criteria.

Södra gave the go-ahead for the project last December, but plans were held back as the company waited for the Swedish authorities to grant the necessary permit.

Despite the delay, Södra is confident that it will be able to catch up on the project timetable and expects the new totally chlorine-free (TCF) softwood pulp to come
on line by October 1999. A capacity of 700,000 tons/yr will be reached on completion, with another 50,000 tons/yr gradually coming on stream during 2000. The extra capacity will be achieved mainly through debottlenecking.

The mill installed a new recovery boiler as part of its last SEK 2,700 million investment program during 1994-1996. The recovery boiler boosted the production potential of the mill.

Assi forests up for sale

AssiDomän has clinched a deal with the Swedish government to sell its forest holdings back to the state. After months of negotiating, the deal means that AssiDomän will be able to spin off 27% of its forest land to shareholders and create a new company, provisionally called Vasaskog. The Swedish state will then make a public offer to shareholders to exchange their Vasaskog shares for shares in AssiDomän.

If the deal goes ahead as planned, the government will take full control of Vasaskog. The state will also reduce its 50.2% stake in AssiDomän, but it is not yet clear by how much as this depends on the exchange ratio at the time of the offer.

Vasaskog will control 900,000 ha of forest land, reducing AssiDomän's self-sufficiency in timber from 65% to about 49%. AssiDomän stressed, though, that most of the strategically important forest will remain within the company.

The spin-off is expected to reduce AssiDomän's turnover by SEK 630 million ($79 million). The company's profit after depreciation will also fall by about SEK 80 million due to extra raw material costs.

On a positive note, the deal will increase the liquidity in AssiDomän's shares, boosting investor interest. AssiDomän said the transaction would also improve the group's capital structure, creating a better balance between industrial and forest operations.

Vasaskog will have a book value of SEK 1,000 million. A listing on Stockholm's stock exchange is planned for May or June 1999.

Favini buys Binda mill

The Favini Group has snapped up Cartiera di Crusinallo, one of Binda's remaining mills in Italy. The Crusinallo mill produces cast coated and release papers.

Favini plans to invest heavily in the mill in the coming months. The plant will benefit from machine upgrades and an overhaul of the quality control system.

The company is also considering a capacity expansion at the mill.

The acquisition will strengthen Favini's market position and add several new products to the group's portfolio, the company said.

Favini already operates a specialty paper mill, Cartiera Favini, and a converting company, Cartotecnica Favini.

Isiklar raises Celhart stake

The Turkish company, Isiklar Holding, has clinched another 23% in Bulgaria's Celhart group.

The latest acquisition gives Isiklar an 80% interest in the Bulgarian company and a cash injection will allow Celhart to upgrade and expand production. The Turkish group expects to see $45 million pumped into the mill, with the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) each contributing $15.4 million.

Celhart has a capacity of 90,000 tons/yr of kraft pulp, 15,000 tons/yr of semi-chemical pulp, 53,000 tons/yr of kraft paper, 18,000 tons/yr of fluting and produces 125 million sacks/yr.

Isiklar first bought a stake in the Bulgarian company back in November 1997.

The Celhart pulp and paper mill is located in the Plovdiv region about 300 km from Istanbul.

Smurfit to sell off Condat

Smurfit has put its French coated woodfree mill up for sale and CVC Capital Partners looks likely to take over all or part of the Condat operation.

Smurfit's decision comes as no surprise to pulp and paper analysts as the sale will allow the company to concentrate on its core packaging operations. But several industry observers were surprised by CVC's interest in the mill.

Part of the answer may be found in CVC's majority interest in another coated woodfree operation in Italy - Cartiere del Garda. But CVC has been in the news more recently for its takeover of KNP BT's packaging arm with Cinven, so another packaging acquisition might have been greeted with less surprise. As one analyst asked, "What are CVC's primary targets?"

Analysts have suggested that CVC might be banking on being able to make a healthy profit on the resale of Condat in the future. The mill's value was highlighted in a recent study by the consultant, ÅF-IPK. In terms of cost efficiency, Condat was among the top 10 coated woodfree mills in Europe, based on data for the fourth quarter of 1997.

Condat was also in the process of being upgraded from a 320,000 ton/yr capacity mill to a 420,000 ton/yr operation. Smurfit announced a FF 320 million ($53 million) investment in 1995, but only a quarter of the work has been completed.

SCA extends its global reach

SCA is making acquisitions worth SEK 1,000 million ($123 million) in the hygiene products sector. The investments will consolidate SCA's presence in Latin America and Asia.

The company plans to acquire a 50% stake in the Brazilian group, Melhoramentos Papeis (MP), following a new share issue. The deal is SCA's first move into Brazil and should be completed by the end of the year.

MP has a tissue capacity of 60,000 tons/yr and annual sales of approximately SEK 900 million. SCA plans to increase capacity on existing machines to 115,000 tons/yr and invest in converting equipment.

In Colombia, SCA has exercised an option to increase its stake from 20% to 50% in the tissue company, Productos Familia. The Swedish group bought a 20% stake last year for $25 million. Since the purchase, sales have improved favorably and Productos Familia has also extended its reach into Ecuador with the purchase of Tecnopapel.

SCA and Productos Familia are also involved in a joint venture, Sancela. The jv is active in the fluff sector in Colombia and Ecuador.

Asian activity: SCA has taken full control of the Philippines-based company, Holland Pacific Paper. The group's capacity is 22,000 tons/yr of tissue paper and 8,000 tons/yr of specialty papers, although SCA plans to convert the specialty PM to tissue production.

Financing for all the projects will be from SCA's 1998 cash flow.

Smurfit takes MacBlo stake

The Jefferson Smurfit Group has snapped up MacMillan Bloedel's 50% stake in the Canadian corrugated container producer, MacMillan Bathurst. Smurfit secured the entry route into the Canadian market after Stone Container's Canadian subsidiary, Stone Canada, bought MacBlo's stake in the 50:50 joint venture. Stone Canada paid C$185 million ($121 million) for the stake, which it immediately sold on to a Canadian subsidiary of the Ireland-based group for the same price.

Stone Canada's purchase comes just days after MacBlo offered to buy its 50% stake, also for C$185 million. Under the terms of the joint venture agreement, Stone Canada either had to accept the offer or ask MacBlo to sell its stake for the same price. MacBlo would have preferred to buy Stone's interest in MacMillan Bathurst, but said the sale was "at a fair and full price".

The joint ownership of MacMillan Bathurst between Stone Container and Jefferson Smurfit allows Stone Container to retain its 50% interest and gives Jefferson Smurfit Group a clear path into the Canadian market.

Stone Container is in the process of merging with the Jefferson Smurfit Group's US affiliate, Jefferson Smurfit Corporation. The merger should be completed in the next few days, creating a new company called Smurfit-Stone Container.

MacMillan Bathurst is the second largest corrugated container producer in Canada, operating 12 plants with an annual capacity of 450,000 tons. The company was established in 1983 as a 50:50 partnership between MacBlo and Consolidated-Bathurst. Stone Container acquired the stake when it bought Consolidated-Bathurst in 1989.

MacBlo to exit packaging? MacBlo is weighing up the long term future of its packaging arm. One option being considered is to separate the business, throwing up the question whether or not MacBlo plans to sell off its packaging operations. MacBlo has just signed an agreement to sell its two medium density fiberboard plants to Temple-Inland for C$160 million. The deal should be closed by the end of September. In June, the company also sold off its paper business to an investment group led by Goepel McDermid.

The moves are part of the company's strategy to focus on its building products business.

And the rest of Stone Canada? Stone Container is still considering the sale of some of Stone Canada's other non-core businesses. The assets up for sale include 48.8 million shares in Abitibi-Consolidated and a 216,600 ton/yr specialty hardwood pulp mill in Quebec.