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01 Jul 2013 12:04
Sappi is selling its Swaziland-based operations, Usutu Forest Products, for R1-billion. (Gallo)
Sappi Ltd, the world’s largest maker of glossy paper, will sell 67 000 hectares (165 561 acres) of forest in Swaziland to finance debt and expand in dissolving pulp production.
The sale of Usutu Forest Products to Swaziland-based Montigny Investments has been agreed at R1-billion, Sappi said in a statement on Monday. Usutu owns softwood plantations, a decommissioned pulp mill and two villages.
“The proceeds will be used for general corporate purposes and will reduce Sappi’s net debt on a pro forma basis” as of March 31 to $2.045-billion, the company said.
“Sappi’s conversion and expansion of its Ngodwana plant to produce dissolving pulp, rather than bleached softwood pulp, has reduced its softwood requirements.”
Sappi is converting paper mills in South Africa and the United States to add an additional 500 000 metric tonnes of dissolving wood pulp as the company shifts to high-end products.
Sappi is working to offset weaker sales in Europe, its biggest market.
The stock gained as much as 5.3%, and traded 1.6% higher at R24.78 by 10:19 am in Johannesburg, valuing the company at R13.4-billion.
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