Oct. 17 (Bloomberg) -- Norske Skogindustrier ASA, the world's second-largest newsprint maker, will raise prices for next year at least 15 percent in continental Europe and more than 20 percent in the U.K., saying that closures have outpaced a decline in demand.

``We are going out to get prices up and we believe that we can achieve it because of the tight market balance in Europe,'' Chief Executive Officer Christian Rynning-Toennesen said today in a telephone interview. ``We have concluded some negotiations at the level that we are expecting, so we can say that we have had some success already.'' He declined to give details or comment on possible actions by competitors.

Norske Skog, based in Lysaker, Norway, has closed more than 260,000 tons in permanent capacity in 2008, while European papermakers have committed to shutting 1 million tons of newsprint, about one-tenth of last year's capacity. That may not be enough as advertising declines on a slowdown in consumer spending, driven by deteriorating economies and a tighter credit market.

``If we don't get it, we will have to shut more capacity,'' Rynning-Toennesen said. ``We know the rate of demand decline for this year is about 2 percent but we do not want to make specific forecasts for next year. What we can say is that it is much less dramatic in the U.S. and, if needed, we will just have to take out more capacity.''

Shares Rise

Norske Skog rose 0.6 kroner, or 3.7 percent, to close at 16.9 kroner in Oslo, recouping losses earlier in the day. The share has lost 63 percent this year on the poor outlook for newsprint, putting the company's market value at 3.21 billion kroner ($492 million).

Customers will be charged a minimum of 75 euros a ton more in continental Europe and at least 100 euros a ton more in the U.K., he said.

Rynning-Toennesen said he aims to conclude talks on 2009 prices with customers by the end of the year. The company's 2008 European newsprint negotiations resulted in prices averaging 5 percent lower in local currencies and 10 percent in Norwegian kroner.

The credit crisis will have an ``almost neutral'' net effect on industry consolidation, Rynning-Toennesen said.

``There will be a volume decline because of less advertising so the pressure to do something is increasing, but it's difficult to get more debt so the financing possibilities are making things more difficult,'' he said.

Norske Skog has about 5 billion kroner in cash after selling its Korean mills this summer, he said.

``For the moment the biggest concern we have is how to place this in a number of short-term liquidity instruments,'' Rynning-Toennesen said. ``We will have a look at our maturity schedules over the next years but fortunately we have such a large cash position that this is something we can handle quite nicely.''

Audun Roeneid, appointed chief financial officer in July, is currently completing a debt restructuring at his present employer, Davie Yards Inc., and will probably join Norske Skog in November, Rynning-Toennesen said.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

Last Updated: October 17, 2008 11:52 EDT