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Powerflute Oyj admission to trading on AIM
15.05.2007
11 May, 2007 FOR IMMEDIATE RELEASE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
POWERFLUTE OYJ
ADMISSION AND COMMENCEMENT OF DEALINGS ON AIM
Powerflute Oyj (the "Company" or “Powerflute”), which operates a paper mill in Finland, and manufactures high quality nordic semi-chem fluting, is pleased to announce that its shares have been admitted to trading on AIM, a market operated by London Stock Exchange plc ("AIM"). Dealings in the shares commenced today at 08.00 a.m. under the ticker symbol POWR. In total, 88,000,000 shares in the Company of no par value have been admitted to AIM.
A placing has been completed of 44,000,000 of Powerflute’s existing shares (the “Placing”) representing 50 per cent. of the Company’s issued share capital. The placing price was set at 110 pence per share which implies a market capitalisation of £96.8 million.
Collins Stewart Europe Limited is acting as Nominated Adviser and Broker to the Company. E Öhman J:or Securities Finland Ltd also acted as a placing agent in Finland and Scandinavia on behalf of the Company and the selling shareholders in relation to the Placing.
Powerflute is a holding company which, through its wholly-owned subsidiary Savon Sellu Oy (together the “Group”), operates a 300,000 tonne per annum rated capacity paper mill (the “Mill”) near Kuopio, Finland, and manufactures a specialised high quality grade of fluting called nordic semi-chem fluting. The Group is one of only three producers of nordic semi-chem fluting (sold by the Group as “Powerflute™”) in the world.
The fluting is made primarily from birch wood sourced from Finland and Russia and is used mainly to manufacture boxes for fresh and frozen produce. Other applications include the packaging of electrical goods and agricultural products and heavy duty packaging for automotive products.
The nordic semi-chem fluting product has certain key advantages over other corrugated case materials and other types of packaging:
Better crush resistance - which means that it has improved load bearing and stacking ability.
Capability to retain a high proportion of its crush resistance in high humidity conditions.
The product is clean and hygienic, making corrugated boxes better to transport perishable foodstuffs such as fresh fruit and vegetables as compared to wooden boxes.
Corrugated boxes are preferred by the fruit and vegetable sector over returnable plastic crates (“RPCs”), particularly in the long distance transportation market, because RPCs require collection and shipping and are costly to return after use.
The Group’s key customers comprise corrugated board and packaging manufacturers. The majority of the Group’s sales are in Western and Southern Europe with Spain, Italy, Turkey and Greece accounting for approximately 50 per cent of the total sales in 2006. Asia is also a significant market for the Group, representing approximately 17 per cent. of annual sales for the financial period ended 31 December 2006. In 2006, the Group commenced sales to the US market.
The Group operates in an attractive segment of the corrugated case materials market. Demand for corrugated board has grown and continues to do so driven by the growth in long distance and international trade.
The Group has a highly experienced board and management team with considerable sector expertise at the highest level:
Dermot Francis Smurfit, Chairman – has had a long career in the pulp and paper industry, stretching over 4 decades. He was latterly deputy chairman of Jefferson Smurfit Group PLC and world-wide sales and marketing director for that group which at that time manufactured over 7.5 million tonnes of paper in 25 countries. He has held a variety of operational posts in his career, having been Chairman of Smurfit Europe, where he was responsible for more than 15 paper mills and 45 corrugating box plants.
Donald (Don) William Coates, CEO – worked for DS Smith plc from 1991 to 2006, and from 2000 was CEO of its paper division, St Regis Paper Company Limited. During his time with DS Smith he handled acquisitions, ran paper mills and box plants and, as CEO of St Regis, undertook a number of strategic initiatives, including the successful development of new products and the rationalisation of the St Regis business. Don is a Chartered Accountant and was President of the UK Paper Federation and UK representative on the Council of the Confederation of European Paper Industries between 2003 and 2005.
Ian McMillan Halliday, Corporate Development Director - the former CEO of the Group, who led its turnaround between January 2005 and December 2006. Ian was Manufacturing Director of Mondi Paper Group and a key board director of that company from 1988 until 1992. He held a senior management position in the Jefferson Smurfit Group in Spain and Austria from 1993 until 1996 and in 1997/98 led the turnaround of the Fletcher Challenge New Thames operation at UK Paper.
Christopher John Knight, non-executive Director – was an investment banker for nearly thirty years with Morgan Grenfell.
Juha Antti Niemela, non-executive Director - former CEO of United Paper Mills, one of the world’s leading forest product groups.
William (Tony) Smith, non-executive Director – former CEO of Smurfit Paper, Board & Reclamation Division (UK & Ireland).
Since the acquisition of the Mill by the Group, production volumes have improved from 223,000 tonnes of product in 2004 to approximately 254,000 tonnes in 2006. The Group’s management achieved the turnaround through a culture change, improved efficiencies and reduced costs, improvement of customer pricing, supplier terms and financial management.
The Group has a clear growth strategy:
organic growth through consolidating and, where possible, extending its strong market position in Europe by leveraging the Group’s relationships with its existing customers and enhancing its profitability by maximising synergies and optimising the cost base;
acquisition led growth in paper and paper conversion assets
focussing on cash flow and returns on investment and maintaining an efficient capital structure in order to maximise shareholder returns.
Commenting on the announcement Powerflute’s Chairman Dermot Smurfit said:
“We are pleased to be admitted to AIM. It will enable us to take our existing business to the next level and will give us a currency to make further acquisitions in the broader paper and paper based packaging markets.”
For additional information please contact:
Financial Dynamics:
Jonathon Brill +44 (0)20 7269 7170
Billy Clegg +44 (0)20 7269 7157
Ekaterina Alferova +44 (0)20 7269 7257
Legal Notice
This announcement has been issued by the Company in connection with the Placing and the application for admission of the Company’s shares to trading on AIM.
All shares having been sold, this announcement does not constitute, or form part of, the Placing or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares in any jurisdiction, nor shall this announcement or any part of it, or the fact of its distribution, form the basis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment whatsoever with respect to the Placing or otherwise. No reliance may be placed for any purpose whatsoever on the information contained in this announcement or on its completeness.
Collins Stewart Europe Limited (‘‘Collins Stewart’’), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company as its nominated adviser and for the Company and the selling shareholders as broker and is not acting for anyone else in relation to the Placing. Collins Stewart will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the Placing and will not be responsible to anyone other than the Company and the selling shareholders for providing the protections afforded to clients of Collins Stewart or for providing any advice in relation to the Placing, the contents of this announcement or any transaction or arrangement referred to herein. The responsibility of Collins Stewart as nominated adviser is owed solely to the London Stock Exchange and not to the Company or its directors or any other person in respect of his decision to acquire shares in the Company in reliance on any part of this announcement. Collins Stewart has not authorised the contents of this announcement and does not accept liability for the accuracy of any information or opinions contained herein, or for the omission of any information from this announcement, for which the Company and its directors are solely responsible.
No representation or warranty, express or implied, is made or given by or on behalf of the Company or Collins Stewart or any of their respective directors, partners, officers, employees, agents or advisers or any other person (whether or not referred to in this announcement) as to the accuracy, completeness or fairness of the information or opinions contained herein and no responsibility or liability is accepted by any of them for any such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any representation or warranty made fraudulently.
Neither this announcement nor any copy of it nor any part of it should be sent to or taken into or distributed to persons with addresses in the United States of America, Australia, Canada, Japan or any other country where such distribution may lead to a breach of any law or regulatory requirement or to any national, citizen or resident thereof or any company, corporation, partnership or other entity created or organised under the laws thereof. Persons outside the United Kingdom into whose possession this announcement comes should inform themselves about and observe any restrictions and legal requirements in relation to the distribution of this announcement and their participation in any proposals as set out in this announcement. Any failure to comply with these requirements may constitute a violation of the laws of the relevant jurisdiction.