PaperlinX has agreed to sell its Italian business, Polyedra, to Lecta, the European Paper manufacturer, for €45 million.
On the sale, PaperlinX Executive Vice President Dave Allen, comments, “The sale of our Italian business will reduce debt and fund essential restructuring in Europe. The purchase price after transaction costs and repayment of related debt in Italy, is expected to release approximately €13m (A$17m) in net proceeds."
The multi-phase restructuring of PaperlinX’s business was a headline issue in the Interim Results announcement on February 23rd and the company expects savings of A$61m by FY14 from its ongoing restructuring programme.
“We have a profitable UK business and strong market positions around the world and this purchase clearly shows there is value in PaperlinX. However, given the continued uncertainty of world paper markets, aggressive cost reduction is our most important initiative for the next two years. Every 1% reduction in our cost to sales ratio represents some A$40m. We are aiming for a 3% total cost reduction, half of which will be generated from the current plans by FY14,” adds Allen.
The sale is expected to close within 90 days, subject to regulatory approvals and a final value audit.