Holmen sells its holding in Modo Paper

Holmen sells its holding in Modo Paper Holmen has reached an agreement to sell its 50 per cent share holding in the associate company Modo Paper to Metsä-Serla. SCA is also selling its shares in Modo Paper to Metsä-Serla. Modo Paper was formed on October 1, 1999 through a merger of Holmen's and SCA's fine paper and merchanting operations. The price of Holmen's shares in Modo Paper is MSEK 6,500, which corresponds to a value of MSEK 19,000 for the whole company on a debt-free basis. As Holmen's book value of the shares is around MSEK 4,500, the sale will generate a capital gain of some MSEK 2,000, or approximately SEK 22 per share. The sale requires the consent of the EU Commission. Fredrik Lundberg, Chairman of Holmen, comments: "In industrial terms, we regard Metsä-Serla as a very suitable owner for Modo Paper. The transaction will result in the formation of the largest fine paper company in Europe. It is the Board's considered opinion that the value realised for Holmen's shares in Modo Paper will be far higher as a result of this sale than a stock market listing would have generated. The sale is therefore in the best interest of Holmen's shareholders." Per Ericson, Holmen's President and CEO, says: "This divestment is one element in the strategy of focusing on newsprint and paperboard that was established by Holmen's Board in January 1999. Holmen intends to grow further in these product areas. The sale will improve Holmen's ability to pursue this strategy vigorously." The sale of the shares in Modo Paper will release capital that will mean that Holmen, following completion of the sale and taking into account its acquisition of Papelera Peninsular, will no longer have any net financial debt, but will instead have net financial assets of some MSEK 1,000. Later this year, therefore, the Board will propose measures to give Holmen a financial structure to permit the Group to move ahead with the strategy within the framework of the Group's established targets. Holmen's financial targets are that the debt/equity ratio shall be between 0.5 and 0.7, and that each year's dividend shall correspond to 5-7 per cent of the company's equity. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/31/20000531BIT00170/bit0001.doc http://www.bit.se/bitonline/2000/05/31/20000531BIT00170/bit0002.pdf