March 26 (Bloomberg) -- Norske Skogindustrier ASA, the second-largest maker of newsprint, sold assets in Norway and Chile as it continues to reduce debt in an industry struggling with oversupply and falling demand.
Norske Skog sold the Bio Bio newsprint mill in Chile to a group of investors from the South American nation for $56 million, and the Follum site in Norway to forestry cooperative Viken Skog for about 60 million kroner ($10.4 million), Lysaker, Norway-based Norske Skog said in two statements today.
The Chilean sale will “improve Norske Skog’s cash flow and financial position,” Chief Executive Officer Sven Ombudstvedt said. The Norwegian sale will result in an accounting gain of 30 million kroner, the company said.
Norske Skog is grappling with about 7.9 billion kroner of debt after three quarters of losses amid oversupply in the newsprint market, competition from online media and rising raw-material costs. Norske Skog decided in November to close the Follum mill, which had the highest unit costs of all its mills in Norway.
In Chile, buyer Group BO plans to continue producing newsprint at the mill, which has an annual output of about 125,000 metric tons, Norske Skog said. Both transactions are expected to be completed during the second quarter.
Norske Skog closed 2.9 percent higher at 6.12 kroner. The stock has risen 17.7 percent this year.
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