Norske Skog heads towards bankruptcy

Norske skog Stoltenberg bankrupcyFormer Norwegian PM, Jens Stoltenberg, visiting Norske skog. Photo: Norske Skog

Stock plummets for Norske Skog – The company heading for bankruptcy

On Thursday, Norske Skog ASA (Norwegian Forrest Industry Incorporated) stock market value fell by nearly 60 per cent. The shares will probably be worthless if and when the company files for bankruptcy.

 

The drawn out process to rescue the company took a new turn on Thursday when Kjell-Inge Røkke’s Aker and the hedge fund Oceanwood announced the news that they wish to buy the paper mills from Norske Skog.

The factories are owned by a subsidary company of the listed company, and the result of the last twist likely thwarths the rescue plan that the board has worked on.

– Following the announcement from Aker and Oceanwood, a recapitalization of Norske Skog is unlikely to happen. As a result, Norske Skogindustrier is likely to go bankrupt, the board of Norwegian Forest Industries stard in a stock exchange announcement Thursday.

Bourse crash

Thereby, the shares in the parent company will most likely become worthless, which naturally affected the stock value on Thursday. At the Norwegian stock exchange, the equity value had fallen by 59.1 per cent at the end of trading.

– I’m not going to pre-empt the events or make speculations, but it’s not very likely that current shareholders will be left with any values, nor will the creditors without safeties, but we will not know the facit before the process is completed,” says  chairman of Norske Skog, Christian Sveaas, to Dagens Næringsliv.

There are still large assets in the factories, but an immense debt burden has long spelt major problems to the company.

Protracted process

In the process of restructuring Norske Skog, three interest groups have been negotiated with each other: the shareholders, the unsecured creditors – who have borrowed money to Norske Skog, but who do not have a mortgage in the factories – and the secured creditors – who have lent out money but have a secured interest in the paper mills.

During the recent weeks, the board of Norske Skog – with chairman Sveaas at the head – has tried to balance the interests of these groups through several proposals for rescue plans to save the company.

Sveaas has always been clear that bankruptcy is the alternative if no agreement is reached.

Has a mortgage against the factories

According to  Hegnar.no The Oceanwood hedge fund, which has now offered to buy the plants alongside Aker, owns all the facilities in the so-called NSF loan with security in the paper mills. Additionally Oceanwood owns the majority of the secured SSN bonds, which means that they can enforce the mortgage as Norske Skog has not paids any of its debts since the summer.

Aker and Oceanwood are going to own 50 per cent each of the newly established company if their plan succeeds.

– Aker has been following Norske Skog for a long time, but we have not found a correct point of entry. Now that a refinancing it is possible, we think it’s a very good time. We have been waiting for this opportunity a long time ago, CEO of Aker, Øyvind Eriksen, said during Aker’s quarterly presentation on Thursday.

No regrets

Chairman Christen Sveaas admits he was sidestepped by Aker and Oceanwood, but emphasizes to E24 that he does not regret that he bought more shares in Norske Skog in August with the hope of landing a rescue plan for the company.

– Absolutely not. I am a forest owner and am concerned that we will have a forest industry in Norway, and I am pleased that Norske Skog’s operating units now get solid and wealthy owners through Oceanwood and Aker, writes Sveaas in an email.

Sveaas bought the shares through his company Kistefos AS up to a share holding of around 13 per cent of the company.

– Kistefos’ shares in the Norwegian Forest Industries have little value, which they have had for a long time. What I have been working for is that the company can survive. The mother company probably won’t, but the paper mills in Norway will continue to do well, Sveaas writes to the financial website.

 

©  NTB Scanpix / Norway Today

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