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Norske Skog to sell Tas forest assets to New Forests

Boyer Tasmania

Norske Skog has entered into an agreement to sell its Tasmanian forest assets to a fund controlled by the Australian based investment manager New Forests Pty Ltd. The purchase price for the assets is $62.5 million. The transaction will result in a gain to be recognized in the first quarter 2020. The sale will be accompanied by a long-term wood supply agreement to provide pulpwood to the Boyer Mill. Source: Timberbiz

“The sale of the Tasmanian forest is a continuation of Norske Skog’s strategic asset review and is in line with Norske Skog´s communicated strategy of optimizing its portfolio and seek value enhancing transactions.

“The sale is part of the Group’s long-term strategy where released funds will enable the necessary conversions, investments in new green projects and investor policy to be fulfilled. I am satisfied that we also have assured a long-term softwood supply agreement for the Boyer mill,” Sven Ombudstvedt, President and CEO of Norske Skog said.

Completion of the forest transaction is subject to customary closing conditions including approval from the Australian foreign investment review board (FIRB) and is expected to take place within the end of the second quarter of 2020.

The sale and the cash proceeds from the transaction will strengthen the group’s underlying balance sheet and financial capabilities and provide increased robustness for future investments in the group and attractive dividends in the years to come.

Norske Skog Boyer has an annual newsprint production capacity of 150,000 tons and magazine (LWC) production of 135,000 tons.

The plantations included in the sale have traditionally supplied around two thirds of Boyer’s annual pulpwood consumption of approximately 550,000 tons. Boyer will enter into a long-term pulpwood supply agreement with the buyer for supply of 360,000 tons annually which will commence from the completion of the transaction.

At the same time the existing contracts related to the plantation assets such as forest harvesting, and transport services will be transferred to the buyer.

Publication paper production will continue at Norske Skog Boyer. Norske Skog’s long-term strategy remains to improve the group’s core business, to convert certain of the group’s paper machines and continue to diversify the business into bioenergy, biochemicals and alternative fibre markets.

New Forests’ Matt Crapp Director of Operations for ANZFF3 and will oversee the transition of the plantation management upon settlement.