By P&PC Staff
By P&PC Staff
International Paper plans to spin off its printing papers segment into a standalone, publicly traded company.
The transaction to create the new company, temporarily called “SpinCo” until a name is finalized, is expected to be completed in the third quarter of 2021. International Paper says the deal will help strengthen both companies.
Upon completion of the spin-off, Jean-Michel Ribiéras, currently senior vice-president of industrial packaging, will become the chief executive officer of SpinCo.
John V. Sims, currently senior vice-president, corporate development, will serve as SpinCo’s chief financial officer. The remainder of the SpinCo leadership team and board of directors will be announced over the next several months.
SpinCo intends to raise debt in order to pay a dividend to International Paper, which will be used to pay down outstanding debt.
“We remain committed to producing sustainable products that people depend on every day and accelerating value creation for International Paper and our shareowners. This transaction represents a logical next step as we continue to build a better IP,” says Mark Sutton, chairman and chief executive officer.
“International Paper will be a more focused corrugated packaging and absorbent cellulose fibres company serving attractive segments, well-positioned to increase earnings and cash generation. I am confident that our plans will create value for our shareowners, employees, customers and other stakeholders.”
International Paper expects to see an additional $350-$400 million of annual earnings by the end of 2023, including $50-$100 million in annual incremental earnings growth and $300 million in structural cost reductions.
Following the completion of the transaction, International Paper expects to have 20 containerboard mills with 14.5 million tons of annual capacity, eight pulp mills with 3.2 million metric tons of annual capacity and 220 converting facilities.
As a standalone company, SpinCo expects to have eight mills with 2.9 million metric tons of annual capacity and 0.4 million metric tons of coated paperboard capacity.
International Paper will continue its joint venture with Ilim Holdings in Russia.