Sappi to Sell Swaziland Forest for 1 Billion Rand to Cut Debt
The sale of Usutu Forest Products Co. to Swaziland-based Montigny Investments Ltd. has been agreed at 1 billion rand ($101.4 million), the Johannesburg-based company said in a statement today. 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 U.S to add an additional 500,000 metric tons 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 percent, and traded 1.6 percent higher at 24.78 rand by 10:19 a.m. in Johannesburg, valuing the company at 13.4 billion rand. Sappi has declined 20 percent this year, compared with a 0.2 percent gain on the FTSE/JSE Africa All Share Index.
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