No further financial support to Segezhabumprom

No further financial support to Segezhabumprom The AssiDomän Board of Directors has decided to cease supplying working capital to its partly owned pulp and paper mill Segezhabumprom in Karelia. This project is facing difficulties in reaching an acceptable profitability within reasonable time, which in turn means difficulties in achieving external financing of investments and working capital. The external financing has been a condition for AssiDomän´s engagement all along the process. "AssiDomän can not finance a high-risk project like this totally on its own. This would mean a too high risk exposure for our group", explains Lennart Ahlgren, President and CEO of AssiDomän. Through Stratton Paper Company AssiDomän controls 57% of Segezhabumprom. In January this year the operational responsibility was taken over by AssiDomän. The situation at the Russian company has now become critical from a financial perspective. In order to keep the production running AssiDomän has been forced to supply working capital monthly in the form of security for loans to Segezhabumprom The management of Segezhabumprom will now turn to the other shareholders in the company to solve the financial issues. These have so far not provided capital. AssiDomän has in a letter to the Russian deputy Prime Minister Boris Nemtsov specified the issues that are most urgent to solve. Besides general tax and bureaucracy problems there are a number of other factors affecting AssiDomän´s assessment of a continued involvement in Segezhabumprom. The most critical issue is to find a solution to the necessary external financing. There is also no agreement on federal tax debts, in spite of contacts at the highest political level in Moscow. No tax agreement means blocked bank accounts, which makes it impossible to carry out normal financial transactions. The Karelian government's public prosecutor is seeking the help of the Russian Anti-Monopoly Committee to declare AssiDomän´s ownership illegal, and appoint external management at the mill. Recently the Arbitration Court in Moscow declared Stratton Paper's permission to acquire shares in Segezhabumprom as illegal. The consequences of this declaration are at this stage difficult to assess. Together these factors indicate an unacceptable situation. Therefore the Board of Directors have decided to withdraw AssiDomän´s further financial support in Segezhabumprom. "This decision to stop financing the working capital of Segezha does not affect our general opinion on future development possibilities in Russia. We still strongly believe in the Russian market. Our corrugated board plant outside St. Petersburg is now ready to start production, and will be officially inaugurated by the end of January, "Lennart Ahlgren concludes. AssiDomän AB Corporate Communications December 17, 1997 For further information, please contact: Lennart Ahlgren, President and CEO, AssiDomän AB, +46 8 655 9000 Berit Hallberg, Senior Vice President, AssiDomän AB, +46 8 655 9000 Frans Benson, Investor Relations, AssiDomän AB, +46 8 655 9000. ------------------------------------------------------------ Please visit for further information The following files are available for download: