Norske Skog NZ mill not for sale

Norske Skog’s plans to sell assets globally to avoid default on its debt do not extend to its New Zealand business. The second-largest newsprint producer in the world is in talks with potential buyers of at least 200 million kroner of non-core assets and plans to raise as much as 125 million euros from a securitised debt transaction, Bloomberg reported, citing an interview with Chief Financial Officer Audun Roeneid.
The company owns the Tasman Paper Mill in Kawerau, which supplies all of New Zealand’s newsprint and telephone directory requirements and also provides 30% of Australia’s newsprint needs. Annual production is around 300,000 tonnes, according to the company’s website. The mill was not among the assets being sold, Carsten Dybevig, vice president corporate communication at Norske Skog in Oslo, Norway, told BusinessDesk.
Earlier this year Norske Skog batted away suggestions by global forestry analyst RISI its Australasian assets were for sale, Bloomberg reported. The Norwegian company’s local subsidiary, Norske Skog Tasman Ltd., reported a loss of $17.4 million in the 12 months ended Dec. 31, turning around a profit of $105.7 million, according to financial statements lodged with the Companies Office. Though revenue was relatively stable at $316.2 million, it took a $14.2 million charge on energy hedging contracts that had netted it some $148 million a year earlier.

Norske Skog is grappling with an 8.4 billion-kroner debt burden and risks losing the ability to tap a revolving credit if it doesn’t meet the facility’s conditions, which may put a 655 million- kroner bond repayment in March 2012 in jeopardy, according to Bloomberg reports. Demand for newsprint is declining because newspapers are reducing in size and circulation. Margins are under pressure because the price of newsprint has risen 2% during the last three years, while the cost of wood pulp has surged 22%.

The Tasman Mill was developed in the 1950s to process wood from the giant state-owned pine plantations in the Central North Island. Norske Skog now operates the paper mill assets, Carter Holt Harvey operates the pulp mill and SCA Hygiene Australasia manufactures tissue and base paper. Source: TVNZ