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M-real to Divest Gohrsmühle Mill in Germany, Alizay Mill in France

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M-real Corp., Finland, part of Metsäliitto Group, this week reported that it plans to divest the entire Gohrsmühle mill in Germany or, alternatively, parts of the mill separately, based on a Paper Park concept. In case the divestment is unsuccessful, M-real says it will commence a process to discontinue the uncoated fine and the unprofitable parts of the specialty paper operations at Gohrsmühle mill. Should the closures materialize, Gohrsmühle mill would only produce cast coated label and packaging products (Chromolux).

M-real also reported that it is planning to discontinue the remaining carbonless paper converting operations at its Reflex mill in Germany.

In recent years, M-real notes that it has had several unsuccessful attempts with a number of candidates to divest the Alizay paper mill in France. The company continues to search for possibilities to divest this mill, and invites credible candidates to a public process aiming at a divestment of Alizay by the end of this September at the latest. Should the company fail to find a credible buyer for the mill within the given time frame, it plans to close the Alizay mill.

If the measures are implemented as planned, M-real's annual sales are expected to be reduced by about EUR 390 million and the operating result to increase by about EUR 60 million based on 2010 actual performances. Most of the annual financial impact is expected to be seen in 2012, with full impact from 2013 onwards.

As a result of these planned measures, M-real's annual paper production capacity would be reduced by about 500,000 metric tpy, of which about 430,000 metric tons would be uncoated fine paper and 70,000 metric tons would be coated specialty papers. None of these planned measures would be implemented without consulting the employee representatives, in line with applicable legal requirements, the company says.

Both Gohrsmühle and Reflex mills have been losing heavily for a long time, M-real notes. If the divestment turns out to be unsuccessful, M-real plans to continue the Chromolux-production on PM 2 and to discontinue all other production operations at Gohrsmühle. At the same time, Reflex carbonless paper converting would be discontinued. If the closures materialize, the personnel reduction at Gohrsmühle and Reflex would total about 480 people. The planned measures have no impact on the previously announced plan to divest Reflex mill's Premium Papers business. In total, there are about 880 employees at Gohrsmühle and Reflex mills, excluding the personnel included in the earlier announced Premium Papers divestment plan.

Alizay mill also has been losing heavily for a long time, the company says. It adds that during the past few years, it has implemented significant internal improvement measures at Alizay, but as the operating environment has become more difficult, the mill's financial performance and outlook have remained very poor. Currently there are about 330 employees at Alizay mill. p>The planned measures are a major step in M-real's transformation to a packaging board focused company. Despite the significant negative non-recurring result impact, the planned measures are well justified from a shareholder value point of view," says M-real Chairman Kari Jordan.

 

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