Lysaker, Norway, 26 May 2011 -- Norske Skog has entered into an agreement to sell all of its shares in the energy company Enerpar (Energias do Paraná Ltda) to a subsidiary of SN Power Invest AS in Brazil (SN Power articipações Ltda) for BRR 120 million, equivalent to NOK 410 million at the current exchange rate. The agreement secures the delivery of energy to Norske Skog's paper mill Pisa in Brazil through to the end of 2014, and gives SN Power an annual supply of 1.2 TWh electric power from 2015 and up to 31 December 2025.
"We have had excess energy in Brazil over a period of time. Through this sale, we secure energy at competitive terms for the Pisa mill, while we at the same time realize the real value of the long-term energy contracts. We are very satisfied with this, and the sale is an important step in our efforts to strengthen Norske Skog's financial position," said Sven Ombudstvedt, CEO of Norske Skog.
The cash effect after transaction costs is about NOK 400 million, and reduces the gearing ratio from 0.90 at the end of the first quarter 2011, to pro forma 0.85 after the sale. A minor gain is expected. The final accounting effect of the transaction will be announced in connection with publishing of the figures for the second quarter. Settlement took place on 25 May. SN Power Invest AS is owned 60% by Statkraft and 40% by Norfund.
In addition, Brazil's Paraná state has changed the VAT legislation giving Norske Skog Pisa and other paper manufacturers the possibility for partly offset the VAT previously charged on goods and services (ICMS), against future costs of electricity used in paper production. Norske Skog may offset a maximum of BRR 1 million (about NOK 3.4 million) per month for this purpose. The maximum refundable amount constitutes approximately BRR 90 million (approximately NOK 300 million). This will reduce future energy costs for Norske Skog Pisa.