HELSINKI (News release) -- Stora Enso has signed an agreement to divest its Sachsen Mill located in Eilenburg, Germany, to the Swiss-based family-owned company Model Group. Sachsen Mill has an annual production capacity of 310 000 tonnes of newsprint specialty paper based on recycled paper.

Under the agreement, Model Group will own and operate Sachsen Mill after the transaction is closed. Stora Enso will continue to sell and distribute Sachsen's paper products under a contract manufacturing agreement for a period of 18 months after the closing. After that period, Model will convert the mill to the production of containerboard. All 230 employees at Sachsen Mill will move to Model Group with the transaction.

"We believe Model will be a good owner to ensure long-term development of the Sachsen Mill. We will continue to serve our customers with high quality paper products from Sachsen Mill at least until the end of 2022," said Kati ter Horst, EVP, Stora Enso's Paper division.

The enterprise value of the transaction is EUR 35 million, subject to customary purchase price adjustments. The impact on Stora Enso's operational EBIT or net debt is not considered material. Stora Enso will book a one-time cost of approximately EUR 32 million in its IFRS operating profit in the second quarter of 2021, considered as an item affecting comparability (IAC). The transaction is expected to be closed during the third quarter of 2021.

About Model Group

Model Holding AG is a 100% family-owned company founded in 1882. Headquartered in Weinfelden, Switzerland, Model Group develops, produces and delivers innovative packaging solutions using cardboard and corrugated board. The company has 9 corrugating production plants in Europe, and it produces containerboard paper at two sites, Weinfelden and Niedergösgen, in Switzerland. The company revenue in 2020 was CHF 859 million and the number of employees 4 225. More info at www.modelgroup.com