Arjo Wiggins cleans up company structure

Arjo Wiggins Appleton (AWA) is the latest in a long line of pulp and paper firms to announce a radical shake-up of its corporate its structure. AWA is to scrap its current US/Europe split and set up three new divisions based on product lines - carbonless and thermal; premium fine, specialty and coated papers; and merchanting. The main focus of the new plan is on "the exploitation of synergies" and much-needed "shareholder value enhancement", the company said.

AWA is also reshuffling players at the top of the pile. Under the new structure, the post of group chief executive will become redundant and the current holder, Philippe Beylier, will step down. Ken Minton will be taking on an executive role as the group chairman.

Stick or sell?: Despite AWA's claims that it remains committed to boosting shareholder value in all three business areas, the program has been received with skepticism in industry circles. Many believe that the moves are a step towards putting up for-sale signs on some of AWA's units. As Christian Georges at Credit Lyonnais explained, "Arjo is maximizing its options. It is rather like cleaning up a flat before selling it. Although commitment has been voiced to all three divisions, we cannot help thinking that the real goal is to "clean-up" the groups' divisions."

But in a speech to analysts, the new executive chairman, Ken Minton, denied the accusations, "There are no problems with the company, there are no black holes in AWA. We are not signaling to the market that we want bids for our businesses." But AWA's executive chairman did not rule out considering any attractive bids that may land before the company's board.

New Waterside sinks under pressure

Time has run out for the UK's New Waterside Paper Mill which will close its doors on 16 March.

Management put the mill up for sale in mid-December in response to tough market conditions and set a 1 February deadline for potential buyers to come forward. But no offers were made, so the mill will be closed down and the machinery sold off separately.

The 20,000 ton/yr machine-glazed paper mill faced dwindling orders as it struggled to compete with cheaper imports. Management put part of the blame on the strength of the UK currency, which made trading conditions even more difficult.

Some 40% of the mill's output was converted into envelopes on-site and the remainder was sold in the UK and export markets. The converting unit will remain in operation.

New Waterside Paper Mill is part of Chapman Industries, which is 100% owned by Trelleborg of Sweden.

Condino mill is up and running

Cartiera Carmignano has completed a rebuild of PM 5 at its Condino mill in Italy. The work raised the machine's capacity by 25% to 27,000 tons/yr of specialty paper.

Voith Sulzer was the main supplier for the $10 million project. As part of the upgrade, the company installed a coating facility to produce one-side coated paper on the PM.

PM 5 is Condino's only machine and manufactures specialty paper for flexible packaging. Cartiera Carmignano also has a mill in Carmignano that produces one-side coated paper for specialty grades, flexible packaging and the self-adhesive label sector. The mill has one PM and an off-line coater.

The company is a wholly-owned subsidiary of the Swiss-based Cham-Tenero group.

Italians plan new PM

Cartiera Partenope has ordered a 140 ton/day tissue machine for its mill in Italy.

The Italian supplier, Recard, has been chosen as the turnkey supplier for the project. The company will supply two stock preparation lines, a crescent former with a double layer headbox and a slitter rewinder.

The new machine will have a working speed of 1,500 m/min and will be installed alongside another Recard plain wire machine at the mill.

Delivery of the new PM has been penciled in for 2000.

Copy up at Veitsiluoto

Stora Enso has restarted PM 2 at its Veitsiluoto mill in Finland following a FIM 280 million ($54 million) rebuild. The upgrade boosted PM 2's capacity from 200,000 tons/yr to 270,000 tons/yr and switched the machine's output to copy paper only. PM 2's production will be mainly focused on B grade copy papers.

The work included improvements to the dilution headbox, gap former, shoe press, dryer section and a new soft calendar.

AM Paper puts tissue PM into action

A new 30,000 ton/yr tissue PM has been launched into action at the AM Paper Group's (AMP) Skelmersdale mill in the UK. "The new PM started up on time and under budget. We are very pleased with the results and the machine is now making a saleable product," said chief executive, Steve Sealey.

The new Beloit PM uses TAD (through air drying) technology which makes softer and more absorbent tissue, the company said. AMP has already found a home for the 15,000 tons of output forecast for 1999 with the UK supermarket chain, Asda.

The company plans to speed up the machine at the end of the year and has already been marketing the remaining 15,000 tons that will come on stream as a result. Some of the output may be sold to continental supermarket chains.

Athens Papermill finally signs deal

A US consortium has signed an agreement to buy state-owned company, Athens Papermill.

Before the deal goes through, the new owners are looking for several assurances from the Greek government, for example about the write-down of debts and tax-related matters. The issues are expected to be resolved shortly.

Athens Papermill has taken out several loans with various banks over the last 10 years and worked up significant debts. Most of the debt is expected to be written off in accordance with Article 4 of Greek law in a bid to put the company back on a sound financial footing. But the Athens Court of Appeal must approve any restructuring proposals before the sale can be finalized.

The transaction is at a very advanced stage and financial advisors, Nikko Europe, are confident that the deal will go through.

The two main parties in the US consortium are the Luxembourg-listed consumer goods company, The Bolton Group, and US financial institution, Goldman Sachs. The remaining members are the financial group, Bain Capital, and a Boston-based strategic consultant, Lochridge. The new management will be headed up by Mr Paolo Forlin, a former executive of Scott Paper Europe.

Holtzmann sets about Maxau rebuild

Holtzmann Papier is getting to work on a DM 160 million ($95 million) investment at its Maxau mill in Karlsruhe, Germany.

The upgrade will raise PM 8's supercalendered (SC) paper capacity by 55,000 tons/yr from its current 208,000 tons/yr. The rebuild is also aimed at improving product quality.

Valmet is leading the upgrade of the machine, adding a new gap former, shoe press and stock preparation system. Voith Sulzer is also involved in work on the calendering unit.

The extra output will be sold in western and central Europe, with much of the material aimed at the German market.

Holtzmann Papier is a subsidiary of Stora Enso and comprises two mills, Maxau and Wolfscheck. The units have a total capacity of 700,000 tons/yr.

The Maxau mill has three machines - PM 8 which is being rebuilt, PM 7 which makes standard newsprint and PM 6 which produces improved newsprint. The Wolfscheck mill has just two machines - wallpaper PM 4 and SC PM 5.

Tervasaari ties up sack project

UPM-Kymmene has completed a rebuild of PM 6 at its Tervasaari mill in Finland. Total investment in the project totaled FIM 100 million ($19 million).

The work lasted from 21 December until 18 January and boosted capacity from 100,000 tons/yr to 115,000 tons/yr of unbleached sack kraft paper. Full production is expected to be reached in "a few months", the company said. The principal aim of the rebuild was to improve quality and enable the PM to produce lighter basis weights.

The main supplier was Voith Sulzer, which rebuilt the press section. Other suppliers included Valmet Automation on the control systems and ABB.

Debottlenecking was also carried out in the pulp mill, pushing capacity up to 115,000 tons/yr.

The Tervasaari mill has three other PMs, two self-adhesive label paper machines and one envelope paper machine.

Reficel finds funding for deinked pulp mill

Reficel has received long-awaited funds for its Esc 2,000 million ($12 million) project to build a greenfield deinked market pulp mill in Portugal. Startup is expected in the fourth quarter of this year.

The loans are being provided by shareholders at present, although Reficel will continue to negotiate with banks in a bid to secure outside funding. The Portuguese group hopes the new shareholder commitment will convince the banks that the project is worth backing.

The financing plan has prompted Reficel to scale back the proposed capacity of the unit from 220 tons/day to 154 tons/day. Earlier proposals to invest in a power plant have also been postponed.

The next stage for Reficel is to finalize supplier contracts and start installing the machinery. The Portuguese outfit has already finished preparatory site work and signed letters of intent with several suppliers.

The project has also received a helping hand from the Dutch wastepaper agent, Akkerman, which has agreed to supply three months worth of recovered paper on credit.

Stracel bids to improve newsprint on PM 1

UPM-Kymmene is set to pump FF 500 million ($88 million) into the Stracel mill in France. The company plans to upgrade newsprint PM 1 in a bid to create a superior quality grade at the mill.

The PM has a newsprint capacity of 250,000 tons/yr, which should remain unaffected by the rebuild, the company said. Valmet is due to start work on the machine in the first quarter this year, with startup penciled in for the first quarter of 2000.

Pentti Arvela, president of UPM-Kymmene's newsprint division, said the rebuilt PM would produce a "totally new type of printing paper for offset printing". The paper would be along the same lines as improved newsprint, he explained, but the quality would go beyond the existing classification scheme.

According to UPM-Kymmene, the paper will become a high quality option for newspapers and newspaper supplements, printed products for advertising and special magazines.

UPM-Kymmene has also started the legal processes required to close its loss-making 140,000 ton/yr Stracel sulfite pulp mill. The company's objective is to close the mill by the end of the second quarter 1999.

Cham takes over Hunsfos

Cham-Tenero has boosted its stake in the Hunsfos mill in Norway. The Swiss group now owns 100% of the Norwegian mill and Hunsfos has been delisted from the Oslo stock exchange. Cham-Tenero took control of the mill in November last year when it upped its previous shareholding from 20% to 96%.

The new owner is busy preparing investment plans for its Norwegian interest. Hunsfos adds an extra 110,000 ton/yr capacity of specialty and graphic paper grades to Cham-Tenero's portfolio.

Varo told to wait

Cartiera di Varo has suffered a setback in its plans to install a new 110 ton/day tissue machine at its mill in Lucca. The Recard PM was due to be delivered in the first three months of 1999, but the supplier has been forced to push back the order.

Cartiera di Varo has come up against problems with a permit for the PM and must wait for a government decision before the project can proceed. As a result, Recard has changed the PM's delivery date to August or September this year. The supplier will also be providing two stock preparation plants and a double slitter/rewinder.

Trial runs start in Uzbekistan

The German-Uzbekistan joint venture, Nambum, has started trial runs on a new stock preparation line at its mill in Namangan. Full production is scheduled for April.

The line will supply the mill's 11,000 ton/yr woodfree PM which started up last year. Since startup, the PM has used wastepaper and pulp as raw materials and operated at just 50% of capacity. But the new stock preparation line will allow the company to reach full production on the PM as it will use cotton linters which are readily available in Uzbekistan. Nambum expects to reach this target by January 2000.

Nambum's main shareholder is the Uzbekistan employment ministry, which has a 40% stake in the joint venture. The remainder is made up of a German company, Ecotex, which has a 24% stake, and private investors.

Romanians wait for bid

Romania's State Ownership Fund (SOF) is to relaunch the privatization of the Celhart-Donaris mill in Braila. The mill was due to be privatized in mid-January, but the sale failed to attract any bidders. A 69.99% stake in the pulp and paper mill was up for sale for Leu 202 billion ($18 million).

Celhart-Donaris has a capacity of 72,500 tons/yr of printing/writing paper along with duplex and triplex board. The mill also operates a 190,000 ton/yr pulp mill.

Expansion project on the horizon

The Toloram Group has firmed up details of an expansion project at its Horizon Pulp and Paper mill in Estonia. The company plans to upgrade sack kraft PMs 1 and 3 and modernize its integrated pulp mill.

The upgrade of PM 1 will allow the mill to switch production from standard to extensible kraft paper and will raise capacity from 60 tons/day to 75 tons/day. Work is scheduled for the end of 1999.

Toloram also plans to carry out debottlenecking work and upgrade the recovery boiler to raise pulp capacity from 130 tons/day to 175 tons/day. The pulp mill investment is scheduled for completion by the first quarter of 2000.

The rebuild of PM 3 will comprise minor changes, for example to the steam and condensate systems. The mill is investigating the possibility of producing white sack kraft paper from market pulp on PM 3, but a decision about this proposal has yet to be finalized.

Pulp mill plans clarified

The International Finance Corporation's (IFC) recent report evaluated the investment possibilities of a pulp mill in Estonia and not just Mainor's proposals to build a pulp mill, as reported in PPI's January issue.

The IFC's study concluded that Estonia has the "basic elements" for a successful pulp mill investment:

raw materials would be available at a competitive price

the country is well located, as it is close to central and eastern European markets

fixed costs, such as labor, are relatively low

Estonia has a good infrastructure.

The positive results of the IFC study have given the government extra ammunition to promote a pulp mill for the country. The government has sent out letters to prospective investors and some interest has been reported, although the authorities have revealed no names.

Volga brightens up as PM 7 restarts

Russia's Volga newsprint mill has restarted PM 7, the last of the idled plants at the mill. The PM was out of operation for several months. The latest startup means all four of the mill's PMs are now up and running after a series of stops and starts.

Volga was beset by many problems including a closure in 1997 due to management difficulties. No sooner had these issues been resolved than the Russian financial crisis swept across the country, resulting in weak order books and forcing the mill into a number of temporary stoppages.

But Volga appears to have overcome these problems and the business is getting back on its feet. The mill is now running close to Volga's full capacity of 40,000 tons/month and has forward orders booked. A Volga spokesman said the mill had "sufficient domestic orders", but admitted that the bulk of its orders were exports.

Israelis tout Turkish business

Rumors are rife over American Israeli Paper Mills' (AIPM) potential takeover target in Turkey. AIPM has revealed that its subsidiary, Hogla-Kimberly, is in negotiations to take over a Turkish competitor, but the name of the target remains shrouded in secrecy.

Output from the two companies is said to be focused on a similar range of products. Hogla-Kimberly operates two plants in Hadera and Afula which produce tissue paper, diapers and incontinence products.

Shandong Chenming starts up LWC PM

Shandong Chenming Paper Holdings has started up a new 100,000 ton/yr paper machine at its mill in Shandong, China. The 4.55 m wide PM produces mainly lightweight coated (LWC) paper and was supplied by Finnish firm, Valmet. The total project cost was RMB 750 million ($91 million).

Shandong Chenming also intends to begin work on a new pulp mill to supply the paper machine early this year. The plant will be constructed in a joint venture with Hong Kong Xinnan Paper and will have a capacity of 300 tons/day of deinked pulp (DIP). The main raw materials for the DIP will be US wastepaper grades, including sorted office paper (37-40). Construction is expected to take one year and the project cost is estimated at $21 million.

Guangzhou delays newsprint PM startup

Guangzhou Paper Mill has pushed back the startup of a second-hand newsprint machine at its mill in Guangdong, China. The 130,000 ton/yr machine was originally scheduled to come on line this year, but the PM is now expected to start up in July 2000.

The PM was purchased from SCA's Ortviken mill in Sweden at a cost of $15 million. The Bel Baie II machine has a trim width of 8.1 m and a design speed of 960 m/min.

The newsprint output from the machine is mainly destined for the domestic market.

Guangzhou Paper Mill has also ordered a 250 ton/day deinking system from Ahlstrom Machinery to supply the newsprint PM. The company will bring the system on stream around September or October this year.

Guangzhou Paper previously started up a chemi-thermomechanical pulp line in July 1997. The 150 ton/day line was supplied by Kvaerner Hymac.

Dong Il restarts rebuilt PM

Dong Il Paper Manufacturing has restarted PM 1 at its Ansan mill in Korea, following a major rebuild. The upgrade has pushed the machine's testliner capacity up from 180,000 tons/yr to 230,000 tons/yr.

The modernization included the installation of a Valmet new Condebelt dryer system, which the company hopes will eventually improve the strength of the testliner by as much as 30%.

Dong Il originally planned to restart PM 1 in December, but was forced to reschedule the completion date.

The Korean firm said that it will continue to invest in PM 1 in a bid to optimize the machine's performance. Dong Il plans to carry out "step by step" upgrades on the line, including modifications to the stock preparation system and improvements to PM 1's forming section.

The PM currently uses virgin fiber on the top layer of its linerboard, but the company hopes that the upgrade will allow it to replace this with recycled fiber.

Work is due to begin in March, with completion scheduled for November this year. PM 1 is Dong Il's sole machine at the Ansan mill.

Amcor leaves Europe

Amcor plans to sell its European corrugated packaging business to a subsidiary of Mondi Minorco Paper for $241 million.

Amcor said the deal fits in with its strategy of divesting non-core or non-profitable business. "In Europe, unlike Australia and other parts of the world, corrugated packaging is not a business for Amcor," said managing director, Russell Jones.

The company said the sale price was above the book value of the business and would result in an abnormal profit. Some of the funds from the sale would be used to reduce company debt.

Cenibra optimizes mill

Cenibra has chosen Kvaerner Pulping to modernize its pulp mill in Belo Oriente, Brazil.

The work will include upgrading the digester and installing a new delignification plant at a total cost of $20 million.

The main reason for the investment is to improve pulp quality. Capacity will also increase from 1,350 tons/day to 1,400 tons/day. Work is scheduled for completion at the end of 1999.

Cenibra has more ambitious plans to boost capacity by 200,000 tons/yr at Belo Oriente. The capacity increase would be achieved via major debottlenecking work. The company is putting the final touches to a preparatory study and expects to make a presentation to the board by April this year.

Caima gears up for takeover action

The Portuguese pulp producer, Companhia de Celulose do Caima, is on track for a major shakeup in its company structure designed to make takeovers easier. The company already has a target in mind, which is practically on its doorstep.

Companhia do Papel do Prado will be up for sale in the next month or so and Caima is keen to become its new owner. At present, Portucel controls a 95.4% stake in the board producer, but this will be sold off to the highest bidder.

The acquisition would be Caima's first venture into the board market. Prado operates two board mills with a combined capacity of 52,000 tons/yr and the company is located just 20 km away from Caima's pulp mill in Constância.

Under the restructuring plan, shareholders have voted to create a holding company, Caima - Industria de Celulose, to control the various assets of the Caima group. The new company will hold Caima's energy, pulp and two forestry-based divisions.

Klippan looks set to exit packaging

The Swedish group, Klippan, is weighing up whether to sell its Fridafors mill, a move which would mean an exit from the packaging business.

The Fridafors mill has two machines with the capacity to make 20,000 tons/yr of packaging grades, including folding boxboard. But the mill has been running at only two thirds of this capacity for some time and has been operating at a loss.

Under Swedish law, Klippan must negotiate with union representatives before deciding the mill's fate. The two most likely scenarios for the mill's future are a sale or a mill closure.

Klippan also has two other mills - the 60,000 ton/yr Klippans mill and the 55,000 ton/yr Lessebo mill, which produce mainly uncoated woodfree papers.

Klippan is a public company and is listed on the Stockholm stock exchange.

Sniace finds ally for PM

Sniace has joined forces with another Spanish company for the long-awaited restart of its newsprint machine. The company aimed to restart the PM by the end of 1998, but the plans have changed somewhat.

In the latest move, Sniace has teamed up with Grupo Inversor de Aranguren to form Papelera de Besaya. Sniace controls 30% of the shares in the new company which plans to restart the PM at the Torrelavega mill at the end of May 1999. Papelera de Besaya has opted to rebuild the machine to produce a range of printing and writing papers instead of just newsprint. The new project is known as "Bestpapel" and will have an initial production capacity of 50,000 tons/yr. Output is destined for both Spanish and export markets.

Stora Enso boasts of bigger benefits to come

Stora Enso is set to reap annual benefits of Euro 300 million ($347 million) from its mega-merger, according to the company's latest synergy forecasts. The cost savings are some 40% higher than Stora Enso's original estimates.

But the annual savings will come at a high cost as an extra 1,500 jobs will be lost between 1999 and 2002. Stora Enso already planned to cut 500 jobs at its headquarters and divisional offices - the additional job losses will be at other units within the new company.

Personnel cuts are not the only way in which Stora Enso plans to cash in on synergies from the merger. Advantages will be gained through production efficiencies as well as in streamlining purchasing, logistics, marketing and administration.

The main areas for change will be the fine paper, packaging board and pulp divisions. "There is more room for streamlining in these divisions through effective production and logistics. As far as production goes, there may be changes in focus rather than production cuts," a spokesman for Stora Enso said.

The company is forecasting savings of Euro 50 million this year, rising to Euro 170 million in 2000 and Euro 240 million in 2001. The Euro 300 million mark should be reached in 2002.

Stora Enso also revealed that the merger will cost the company approximately Euro 210 million in write-downs and provisions. Added to this figure, the group has decided to take a Euro 245 million hit in its 1998 results for structural changes. These include write-downs on plants with poor profitability as well as on certain machinery and equipment.

Södra takes stock of BC mills

Södra may soon be branching out from its European production base into markets further afield. The company is eyeing up various mills in British Colombia (BC) in a bid to boost its market share in the softwood kraft pulp sector. The move is part of the Swedish firm's new expansion strategy which pinpoints three main areas of growth - the existing units, new mills and takeovers.

Although the company has no concrete plans as yet, a takeover of a BC mill could be on the cards for 1999, according to a Södra spokesman. "There are a few mills on the market at the moment and BC could be a good move because the investment costs would not be too high," he added.

Södra claims to control around 12% of the softwood pulp market in Europe, but the company aims to double this figure through acquisitions and investments.

CartoInvest heads for the UK

CartoInvest has unveiled major expansion plans for its newly acquired mill in the UK. The Italian tissue giant plans to install two new PMs at the Oakenholt mill, part of the North Wales Tissue subsidiary it has set up.

CartoInvest has been quick off the mark as the first PM is already on Recard's order book. PM 1 is scheduled to start up in January 2000 and if all goes to plan, the second PM will come on stream a year later. Both machines will have a 20,000 ton/yr capacity and are set to produce a wide range of tissue products. Plans are at an advanced stage as the mill already has all the necessary infrastructure and permits for the machines.

Output from the new PMs will be targeted at the UK market. CartoInvest is hoping to replace some of the UK's tissue imports with its homegrown products. The new mill is an "ideal location" for CartoInvest, according to a company spokesman. The acquisition fits in with the group's European growth strategy aimed at expansions on the continent and in the UK. Oakenholt is also near the company's existing UK clients in Manchester and Liverpool, as well as being in close proximity to the Birkenhead port for pulp imports.

The mill was owned by Barlow Paper until the group decided to pull out of paper production last year. Under its former owners, Oakenholt operated one 16,000 ton/yr machine which was sold off before the Italian firm took over the site.

Fine paper is out of favor at new-look MoDo

MoDo's fine paper unit has become the center of attention in industry circles after the group announced it is "open to co-operation with other companies" for the division. The move is in line with a new company strategy which will focus on Holmen Paper (newsprint and magazine papers) and Iggesund Paperboard. MoDo intends to expand these operations through organic growth and acquisitions, although no timetable has been set for any moves.

The company declined to comment on possible link-ups for its fine paper operations. Analysts were also reluctant to name potential partners, but as one analyst put it, "Who isn't open to partnerships in their fine paper operations?"

According to another analyst, the solution to the current fragmentation in Europe's fine paper market would be to set up a new European company. "It would make sense to make one big player out of all the groups stuck in the middle," he said. "What MoDo is saying is that it is not looking for an outright sale but some kind of partnership or alliance. But for the right kind of price, I think it could sell the business," he added.

Although the future of MoDo's fine paper division lies wide open, the company made it clear that future production would be centered on office papers.

Pulp out of picture: On the market pulp side, the direction is slightly clearer. MoDo aims to "reduce the already low exposure to market pulp". As a result, the company has shelved plans to add 200,000 tons/yr of bleached kraft pulp at its Husum mill.

MoDo's president and CEO, Bengt Pettersson, stressed that the decision was in line with the group's new strategy. "The postponement is not a market- based decision. It has nothing do with the present pulp price," he said. For the time being, MoDo has no plans for its other market pulp mill at Domsjö, but the company has not ruled out selling the unit.