Abitibi sells PanAsia stake
September 12, 2005 By Pulp & Paper Canada
Abitibi-Consolidated has wrapped up a share purchase agreement with Norske Skog. The transaction saw Abitibi divest…
Abitibi-Consolidated has wrapped up a share purchase agreement with Norske Skog. The transaction saw Abitibi divest its 50% share ownership in PanAsia Paper Company for a cash consideration of $600 million U.S., plus a cash purchase price adjustment of up to $30 million U.S. (depending on whether or not certain financial performance goals are reached in 2006).
The price represents a total enterprise value of roughly $1.85 billion U.S. for PanAsia, given its current debt level and the presence of minority partners in three of its mills.
Although the deal is still subject to regulatory approval, should the transaction go as planned, Abitibi will effectively reduce its net debt level by more than $1 billion.
The company has confirmed that the bulk of proceeds from the sale will be used to maximize cash flow in North America.
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