SPCI´99: New roads on map of Swedish forest industry
Activities within the Swedish forest industry have been characterized by major changes during recent months. Some roads on the industry's atlas have been changed and new roads created. Time will tell where the new roads may lead. The future of SCA's fine paper operations has finally been decided. They will be merged with the equivalent businesses at MoDo. The deal is expected to go through formally on 1 October this year, provided it is approved by the relevant competition authorities (no difficulties are expected, according to MoDo) and at the AGM of SCA Hygiene Products (formerly known as PWA).The combined entity will have a total capacity of about 1.75 million tpy of woodfree paper, which works out at a 12% market share, making it the third-largest fine papermaker in Europe, behind Stora Enso and UPM-Kymmene, with almost nothing between the second and third places. The company«s exposure to pulp is low, as it has 1.1 million tpy of its own pulp capacity, with 80,000 tpy being sold as market pulp.By grade, the company will predominantly operate in uncoated woodfrees, with a capacity of about 1.2 million tpy, with a further 550,000 tpy being coated. Most of the coated paper is from SCA, while more than two thirds of the uncoated tonnage is from the MoDo mills.The group's stated strategic growth segments will be coated sheets and A4 sheets. It will be the fourth-largest European producer of coated sheets, behind Sappi, Stora Enso and Burgo, while in the uncoated woodfree A4 copy paper sector, it will be third largest behind Stora Enso and International Paper.Although this is effectively a merger, the deal is being structured to allow a new MoDo subsidiary to buy the SCA operations, paying for them with its own shares. The end result will be that SCA and MoDo each own 50% of this new company, which in turn will own all of the two companies' fine paper assets.The unit will also include the two companies' merchanting businesses, which are expected to contribute deliveries totalling some 1.1 million tpy in 20 countries. Combined turnover is slated to reach SEK 19 billion ($2.25 billion), with slightly over half coming from the MoDo units. The new group will include four mills from the MoDo side: Husum and Silverdalen in Sweden and Alizay and Pont Sainte Maxence in France, and three from SCA: Stockstadt in Germany, Hallein in Austria and Wifsta in Sweden.Losing weightThe intention is to list the new company on the stock market within two years. The business will stand alone and be independent of MoDo and SCA, and will also raise external financing. This will take some of the burden off both companies' shoulders, because, although pro-forma results from the post-slump boom year, 1995, were good, pro-forma earnings in the three subsequent years have represented less than 5% of turnover. Sweetening the pot for prospective future shareholders, though, the merger is eventually (within two to three years) expected to result in "consolidation gains" of SEK 650 million per annum, or about 3% of the group's sales.Another significant result of the merger is that MoDo will cease to exist. The company itself will not disappear of course, but its name will. MoDo has decided to allow the new merged group to be called MoDo Paper, which is already the name of the company's fine paper business. As a result, MoDo will change its own name, and it will do this in advance of the new company's listing on the stock exchange, at the latest. The new name has not yet been decided.Changes within AssiDomänSeveral questions surrounding AssiDomän have been resolved during the past six months. The Swedish goverment implemented the so-called Sveaskog offer, whereby government ownership in AssiDomän has been reduced from 50.2 percent to 35.3 percent. Sveaskog, a new company, was established in conjunction with the government's decision to buy nearly one-fourth of AssiDomSn's forests, which were acquired to increase the value of the company's shares. The sale was also designed to increase the government's influence over woodlands earmarked for protection and secure raw material requirements for inland sawmills. Shareholders in Sveaskog have been offered three shares in AssiDomän in exchange for each block of 10 shares in Sveaskog. The tax assessment value of the forest assets has been estimated at approximately SEK 3 billion.Bo Dockered was appointed recently to serve as Chairman of Sveaskog. He has resigned his position as Vice Chairman of AssiDomän's Board of Directors. In conjunction with the Sveaskog transaction, AssiDomän's President, Lennart Ahlgren, resigned his position. Roger Asserståhl is serving as interim President of the company until the appointment of a new President is announced at the Annual General Meeting on June 14."The company has entered a phase of development that requires a more clearly defined business and marketing strategy, and the Board of Directors believes a new management profile is needed to lead the transformation process," says Olle Lund, Chairman of AssiDomän's Board of Directors. A proposal will also be submitted at the Annual General Meeting to elect Lars-Åke Helgesson, Carl Wilhelm Ros, Gunnel Duvblad and Björn Björnsson as new member of the Board. Bernt Magnusson is being proposed as Chairman of the Board.Vacant CEO positionsSeveral company executives have announced their resignations, including Sverker Martin-Löf, President of SCA, who intends to resign in the year 2000 and become Chairman of the Boards of SCA and AGA. Jaroslav Havlicek, President and CEO of Rottneros, has also announced his intention to resign. He will remain as President until his successor is appointed, Jaroslav Havlicek will then be offered a seat on Rottneros' Board of Directors.Changes have also been made in the corporate management staff of Korsnäs, which appointed Vigo Carlund as new President in the beginning of 1999. Vigo Carlund's management responsibilities were expanded recently and, in addition to his post as President of Korsnäs, he will soon be named President of Kinnevik. Christer Simr*n will be appointed Executive Vice President of Korsnäs.(Papernews)