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April 27, 2016

UPM sells Schwedt mill to LEIPA for €70 million

UPM sells Schwedt mill to LEIPA for €70 million

UPM has signed an agreement to sell its Schwedt newsprint mill site (Germany) and relevant assets to LEIPA Georg Leinfelder GmbH for the aim of a conversion into liner production. The entire personnel of Schwedt mill will transfer to LEIPA as old employees. The transaction price is EUR 70 million. The transaction is subject to customary third party approvals.

As part of the transaction, the parties have agreed to enter into a contract manufacturing agreement for newsprint for a transition period which would end latest at the end of 2017. The mill's capacity is 280,000 tonnes of newsprint annually.

LEIPA will convert the mill into liner production. The planned production capacity would be approximately 450,000 tonnes of liner annually.

"With this transaction UPM and LEIPA will have an improved opportunity to develop their businesses to meet the market needs. LEIPA is a solid and successful player in the liner business," says Winfried Schaur, Executive Vice President, UPM Paper ENA.

"The negotiations with LEIPA have proceeded well and we believe that the transaction will bring benefits to the employees in the form of future employment at a converted site," says Schaur.

UPM continues newsprint production at its Chapelle, Kaipola, Hürth, Schongau, Shotton and Steyrermühl mills.

The Finnish pulp and paper maker announced at the end of 2014 a plan to close 800,000 tonnes of publication paper capacity in Europe as it aims to cut 550 jobs and save 150 million euros annually. The world's biggest producer of graphic papers, such as magazine paper and newsprint, said the industry in Europe continues to suffer from overcapacity as consumers shift from print to digital devices.

Back in June 2015, UPM permanently closes paper machine No.3 at UPM Chapelle Darblay. UPM Chapelle Darblay has continued paper production on the remaining paper machine No.6 producing standard newsprint and improved grades (MFS) with an annual capacity of 250,000 tonnes.

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