Holmen has reached an agreement to sell its 50 per cent share holding in
the associate company Modo Paper to Metsä-Serla. SCA is also selling its
shares in Modo Paper to Metsä-Serla. Modo Paper was formed on October 1,
1999 through a merger of Holmen's and SCA's fine paper and merchanting
The price of Holmen's shares in Modo Paper is MSEK 6,500, which
corresponds to a value of MSEK 19,000 for the whole company on a debt-free
basis. As Holmen's book value of the shares is around MSEK 4,500, the sale
will generate a capital gain of some MSEK 2,000, or approximately SEK 22
The sale requires the consent of the EU Commission.
Fredrik Lundberg, Chairman of Holmen, comments:
"In industrial terms, we regard Metsä-Serla as a very suitable owner for
Modo Paper. The transaction will result in the formation of the largest
fine paper company in Europe. It is the Board's considered opinion that
the value realised for Holmen's shares in Modo Paper will be far higher as
a result of this sale than a stock market listing would have generated.
The sale is therefore in the best interest of Holmen's shareholders."
Per Ericson, Holmen's President and CEO, says:
"This divestment is one element in the strategy of focusing on newsprint
and paperboard that was established by Holmen's Board in January 1999.
Holmen intends to grow further in these product areas. The sale will
improve Holmen's ability to pursue this strategy vigorously."
The sale of the shares in Modo Paper will release capital that will mean
that Holmen, following completion of the sale and taking into account its
acquisition of Papelera Peninsular, will no longer have any net financial
debt, but will instead have net financial assets of some MSEK 1,000. Later
this year, therefore, the Board will propose measures to give Holmen a
financial structure to permit the Group to move ahead with the strategy
within the framework of the Group's established targets. Holmen's
financial targets are that the debt/equity ratio shall be between 0.5 and
0.7, and that each year's dividend shall correspond to 5-7 per cent of the