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Management Side
Technical Side
Norske Skog Plans to Launch a New Recapitalization Proposal
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Oslo, Norway 12 September 2017 -- Norske Skog's newly elected board of directors is progressing the recapitalization process and will continue to work to develop a sustainable, industrially based recapitalization proposal to the stakeholders of the group. This recapitalization proposal will be based on the current operating performance and outlook for the Norske Skog group, and will seek to provide a robust industrial and financial platform for the future development of the group.

The board's current intention is to make public the industrially based recapitalization proposal on Monday 18 September (at 13.00 CET), after which date the group's financial creditors will be expected to have a 10 business day period until 2 October at 17.00 CET to accept or reject the board's proposal. The recapitalization proposal will be based on the recently announced 2017 gross operating earnings estimate of around NOK 700 million. The recapitalization proposal will reduce the group's debt position and interest payments to a level which leaves Norske Skog as an industrial company with a realistic and long term sustainable capital structure to enable future development of the group in a rather challenging international business environment.

The company would like to remind stakeholders that the long term performance and competitiveness of Norske Skog's business units are heavily influenced by fluctuations in currency, selling prices and prices of raw materials, especially energy and fibre.

In Europe our operating units have long-term power contracts applying today's forward prices on electricity and currency rates, which constitute approximately gross NOK 1.7 billion negative value. Using today's currency and forward prices on electricity the contracts for the period from 2020 to 2024 imply on average an annual costs increase of approximately NOK 200 million and around NOK 60 million for 2025, compared to the energy costs in 2017. For 2017, the energy costs are estimated to include approximately NOK 100 million in annual negative value from the long term power contracts. In Australasia our operating units have long-term power contracts applying today's forward prices on electricity and currency rates, which constitute approximately gross NOK 1.8 billion positive value. Applying today's currency and forward prices on electricity, the annual cost of energy would increase by approximately NOK 300 million in 2021 and approximately NOK 250 million further from mid 2022 due to the expiration of the long-term contracts. The calculation of these values is highly sensitive to changes in forward prices and currency rates, likewise, there is material uncertainty on these two factors as some of the power supply contract arrangements are in place until 2026.



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