TASMANIA (News release) -- 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 AUD 62.5 million (NOK 388 million). The book value of the assets sold per 31 December 2019 were NOK 297 million, and 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.
"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 further strengthen the group's underlying balance sheet and financial capabilities, and thereby 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 2/3 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 to diversify the business into bioenergy, biochemicals and alternative fiber markets.