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UPM Enters into Exclusive Negotiations

Helsinki, Finland 03 July 2012 -- UPM is entering into exclusive negotiations with VPK Packaging Group NV and Klingele Papierwerke through their newly created joint venture company, for the sale of assets and part of the land at the UPM Stracel paper mill site in Strasbourg, France. VPK and Klingele have made an offer on the acquisition of assets from UPM. The offer is subject to finalization of its review by the bank mandated for the financing. According to the plan, UPM would retain part of the Stracel real estate in its possession for potential future production of advanced biofuels.

VPK and Klingele plan to convert the Stracel mill into a recycled fibre-based containerboard unit, producing fluting and test-liner. The planned production of the mill would be approximately 300 000 tonnes per year. The conversion from the current magazine paper production would require a considerable investment by the two buying companies. The new converted mill would create 140 jobs.

This transaction is subject to completion of the employee information and consultation process on the planned closure of Stracel and the social plan implemented by UPM at such occasion, which the contemplated transaction is a part of, due to the 130 job offers it is to provide to former UPM employees. This process will be launched shortly and is expected to be completed during the second half of 2012.

On August 31, 2011 UPM announced the completion of a comprehensive review of the long term competitiveness of its publication paper mills. As a part of this review UPM announced the intent for the sale or other exit of the UPM Stracel paper mill. Since this, UPM has been working closely with the political, administrative and economic stakeholders to find the best possible solutions for the site and the employees.

“UPM has been conducting an active search for a buyer which could engage in a serious and credible project for the industrial restructuring of the Stracel site. The plan at hand provides a good opportunity for a new future for Stracel and would create a significant number of job opportunities on the site”, says Jyrki Ovaska, President of UPM Paper Business Group.

If UPM accepts the offer that has been submitted, the conversion project could start and the reconversion period would be approximately 12 months. Providing the plan proceeds, the converted mill would start the production in the second half of 2013.


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