"In spite of hard work for several years we have not managed to turn a profit in China," said CEO Christian Rynning-Tønnesen. "In June this year, we announced the sale of our mill in Shanghai. With the sale of Hebei, Norske Skog is no longer producing paper in China. The sale of Norske Skog Hebei is a continuation of our effort to reduce Norske Skog's net debt and improve profitability."

Norske Skog Hebei has a production capacity of 330,000 metric tons of newsprint. There are about 250 employees at the mill.

Norske Skog's pro forma net debt after the transaction will be NOK 11.4 billion, down from NOK 12.2 after the second quarter of 2009, while gearing will be marginally improved. The sale entails an accounting loss of around NOK 650 million.

Key figures Hebei (million NOK)

The transaction is contingent upon approval from Chinese authorities. It is expected that the transaction will be concluded by the end of 2009. The accounting effects will be recognized in the third quarter of 2009, and a more detailed overview will be published in connection with the presentation of the results for the third quarter of 2009. 

Norske Skog has operated the two Chinese newsprint mills, Norske Skog Hebei and Shanghai Norske Skog Potential Paper, since 2005, when Norske Skog bought out its partner and became the sole owner of the PanAsia Paper Company.

The buyer, Shandong Huatai Paper, is China's largest producer of newsprint, and has other business activities. The company is headquartered in the Shandong province in Eastern China and listed on the Shanghai Stock Exchange.