The origami effect
Paperlinx has shored up it balance sheet after agreeing to allow Nippon Paper to fold the paper company's Australian Paper business into its structure.
It's not just China that's snapping up Australian assets, cash-rich Japanese companies are there too, taking advantage of cheap valuations and a gummy credit market.
Nippon Paper is one such company, acquiring the Paperlinx's Australian Paper manufacturing business for $700 million, including $600 million in cash. Paperlinx, which makes most of its money from marketing brands like Spicers and Reflex, rather than making the stuff, will receive $60 million upon signing the deal (hopefully on a crisp sheet of Australian-made Reflex).
The sale gives Paperlinx the cash it needs to reduce debt. Hit particularly hard by the credit crunch, Paperlinx hybrids have been paying incredible yields of over 50 per cent.
Paperlinx's interim results will now be delayed until February 27 to take account of the sale.
"The divestment is a major step in the transformation of Paperlinx and substantially strengthens our financial profile at a time of volatility and uncertainty in global economic markets," said chairman David Meiklejohn. "The board believes this transaction is in the best interests of the company and its shareholders."
The sale will include the Maryvale paper mill in Victoria's Gippsland region, but will exclude mills at Burnie and Wesley Vale in Tasmania.
Advised by a team at Macquarie led by David Mustow, the sale is expected to be completed by mid 2009, subject to the usual conditions, plus the approval of Paperlinx creditors.
Macquarie worked with Deutsche Bank late last year on a Paperlinx share placement.
Nippon Paper is one such company, acquiring the Paperlinx's Australian Paper manufacturing business for $700 million, including $600 million in cash. Paperlinx, which makes most of its money from marketing brands like Spicers and Reflex, rather than making the stuff, will receive $60 million upon signing the deal (hopefully on a crisp sheet of Australian-made Reflex).
The sale gives Paperlinx the cash it needs to reduce debt. Hit particularly hard by the credit crunch, Paperlinx hybrids have been paying incredible yields of over 50 per cent.
Paperlinx's interim results will now be delayed until February 27 to take account of the sale.
"The divestment is a major step in the transformation of Paperlinx and substantially strengthens our financial profile at a time of volatility and uncertainty in global economic markets," said chairman David Meiklejohn. "The board believes this transaction is in the best interests of the company and its shareholders."
The sale will include the Maryvale paper mill in Victoria's Gippsland region, but will exclude mills at Burnie and Wesley Vale in Tasmania.
Advised by a team at Macquarie led by David Mustow, the sale is expected to be completed by mid 2009, subject to the usual conditions, plus the approval of Paperlinx creditors.
Macquarie worked with Deutsche Bank late last year on a Paperlinx share placement.
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