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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.

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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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