M-real Divests its Myllykoski Paper Holding to UPM

Helsinki, Finland, Jun 29, 2011 - M-real Corporation, a part of Metsäliitto Group, has entered into an agreement to divest to UPM-Kymmene Corporation its 35% holding in Myllykoski Paper and the capital loan M-real has granted to Myllykoski Paper. Consequently M-real books in its 2Q 2011 result before taxes a EUR 4 million impairment. M-real will classify the Myllykoski-holding according to IFRS5 as Assets Held for Sale and recognizes it to its fair value. The transaction has a EUR 10.5 million positive cash impact.

UPM has conditionally agreed to acquire M-real’s holding in Myllykoski Paper according to a pressrelease from the company. UPM and the Finnish pulp producer Oy Metsä-Botnia Ab (“Botnia”) have today agreed a transaction whereby Botnia has redeemed approximately 6.7 % of Metsä-Botnia’s shares owned by UPM for EUR 140 million. UPM will record a capital gain of approximately EUR 70 million from the sale of the shares. 

UPM has also agreed to give a call option to the Finnish Metsäliitto Group for the remaining 11 % of Botnia still owned by UPM after the redemption and cancellation of the redeemed shares. According to the option agreement, Metsäliitto Group has the right to purchase the remaining shares within the next two years.

Today’s agreements are based on the valuation of UPM’s original 17 % share of Botnia at EUR 290 million.

Today’s transaction is in line with UPM’s strategy to grow as a cost competitive pulp producer and become an active market participant in global pulp markets. UPM’s annual pulp production capacity is currently 3.2 million tonnes. The group’s current asset base consists of four modern pulp mills, three in Finland and one in Uruguay. The product range covers northern hardwood and softwood pulp as well as eucalyptus pulp.

UPM has conditionally agreed to acquire M-real’s holding in Myllykoski Paper Oy

UPM acquires M-real Corporation’s 35% holding in Myllykoski Paper Oy and the capital loan M-real has granted to Myllykoski Paper Oy for a total of EUR 10.5 million.

This transaction is subject to the closing of UPM-Kymmene’s acquisition of Myllykoski Corporation and Rhein Papier GmbH and to the approval of the relevant regulatory authorities. Today’s transaction is expected to be closed towards the end of the third quarter of 2011.