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UPM to Sell Stracel Mill in France for Conversion to Containerboard Production

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UPM, Helsinki, Finland, has begun negotiations with VPK Packaging Group NV, Belgium, and Klingele Papierwerke, Germany, through their newly created joint venture company, for the sale of assets and part of the land at the UPM Stracel paper mill site in Strasbourg, France. VPK and Klingele have made an offer on the acquisition of assets from UPM. According to the plan, UPM would retain part of the Stracel real estate in its possession for potential future production of advanced biofuels.

VPK and Klingele plan to convert the Stracel mill, which produces 280,000 metric tpy of coated magazine papers and specialty newsprint, into a recycled fiber-based containerboard unit, involving an investment of some EUR 100 million. Planned production capacity of the mill would be approximately 300 000 metric tpy of fluting and testliner between 80 and 130 gsm, on a 8.40 m wide machine.

The conversion from current magazine paper production would require a considerable investment by the two buying companies. The new converted mill would create 140 jobs.

The transaction is subject to completion of the employee information and consultation process on the planned closure of Stracel and the social plan implemented by UPM at such occasion, which the contemplated transaction is a part of, due to the 130 job offers it is to provide to former UPM employees. This process will be launched shortly and is expected to be completed during the second half of 2012.

On Aug. 31, 2011, UPM announced the completion of a comprehensive review of the long term competitiveness of its publication paper mills. As a part of the review, UPM announced its intent to sell or otherwise exit the UPM Stracel paper mill. Since then, UPM has been working closely with the political, administrative, and economic stakeholders to find the best possible solutions for the site and the employees.

"UPM has been conducting an active search for a buyer that could engage in a serious and credible project for the industrial restructuring of the Stracel site. The plan at hand provides a good opportunity for a new future for Stracel and would create a significant number of job opportunities on the site," said Jyrki Ovaska, president of UPM Paper Business Group.

If UPM accepts the offer that has been submitted, the conversion project could start and take approximately12 months to complete. Providing the plan proceeds, the converted mill would start production in the second half of 2013.

VPK Packaging Group is an integrated European packaging group with 33 companies spread across 12 European countries, realizing sales of EUR 700 million. It has a total of 3.000 employees. Klingele is one of the leading independent producers of containerboard and packaging made of corrugated board.

The company consists of one paper mill, six integrated corrugated plants, and seven converting plants in Europe and Africa, realizing sales of EUR 340 million and having a total of 1.250 employees. The total production of both respective groups, VPK and Klingele, amounts to 600.000 metric tpy of paper and 1.000.000 metric tpy of packaging.


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