After years of debt crisis, bankruptcy and a four-month-long bidding process, a London-based hedge fund has finally emerged as the new owner of the Oslo-based forest products firm Norske Skog. The hedge fund Oceanwood promises to protect and nurture the company’s profitable operations, while an unsuccessful Norwegian bidder was wishing them good luck.

Norske Skog paper plants like this one in Trøndelag are expected keep operating as usual under the ownership of new London-based investors. PHOTO: Norske Skog

Sven Ombudstvedt, a former chief executive of Norske Skog who made a comeback last year as its chairman when lenders took control of the company, called the sale to Oceanwood “one of the most important milestones for the Norske Skog Group in recent years.” He hailed Oceanwood’s interest and winning bid for the company, claiming that its decision to buy a majority stake in a secured bond and then initiate a sales process, ended up saving the company’s operations.

Newspaper Dagens Næringsliv (DN) reported that the purchase price is estimated to be around EUR 235  million, or NOK 2.26 billion, plus debt obligations. It’s been a highly complicated transaction that remains contingent on Oceanwood securing regulatory approvals in other countries where Norske Skog operates including Australia and New Zealand. That can take another four to six months.

John Chiang, investment director of Oceanwood, noted how the hedge fund made its first investment in Norske Skog three years ago. He claimed that Oceanwood had since both “supported and worked constructively” for the company.

Oceanwood teamed up briefly with another Norwegian investor and industrialist, Kjell Inge Røkke and his Aker concern, and defeated a rescue plan hashed out by Norske Skog’s largest shareholder at the time, Christen Sveaas, who’d been viewed as the company’s most likely saviour. Oceanwood and Røkke’s Aker planned to bid jointly for Norske Skog’s plants. Norske Skog was ultimately forced into bankruptcy just before Christmas, Røkke later withdrew from the bidding process and Oceanwood continued on its own.

Unsuccessful bidder wishes Oceanwood well
Norwegian industrialist Jens Ulltveit-Moe, who’s become a climate and environmental activist in Norway, emerged earlier this year as another rival bidder, with many in Norway hoping he’d gain control of the company. He ended up being out-bidded by Oceanwood and was admitting defeat on Friday.

“I wish them all the best,” Ulltveit-Moe told DN Friday morning when the sale to Oceanwood was finally announced. “When there’s an auction and bidding, someone always has to lose. This time it was me.” He said he was glad the lengthy sales process was over.

“It’s very good that a decision has finally been made,” Ulltveit-Moe told DN. “I hope they’ll manage to develop this important company.”

Asked whether he thinks a British hedge fund is the right owner for Norske Skog, Ulltveit-Moe replied that “they have at least invested a lot of money in it. I wish them good luck. They’ll certainly get Norwegian partners to cooperate with who can do the job very well.”

‘Unique opportunity’
“It’s a fantastic day for Norske Skog,” claimed its chief executive Lars Sperre, who’s been closely involved with efforts to save the company. He stated that with Oceanwood as its new owner, the company and its employees have “a unique opportunity” to build up a “sustainable business platform” that would make it possible to further develop Norske Skog’s core operations of paper production and invest in “promising new growth projects.”

Sperre also thanked Norske Skog’s customers, suppliers and employees “who have demonstrated a tremendous amount of trust and support throughout this process.”

Chiang agreed, and claimed that Oceanwood was now “very excited to team up with Norske Skog’s management and employees. We share the ambition to see the new Norske Skog succeed and realize the potential we believe is inherent in the operation as it continues to transform and grow.”

For more details, see the full press release here (external link to Norske Skog’s website). Berglund

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