Cerberus Capital Management first back in the leveraged buy-out game

I think (and as I write quickly: WordPress now tells you when scheduled maintenance is due to begin – a wonderful introduction!).

Stora Enso Oyj, the world’s largest paper maker, will sell its North American unit to Cerberus Capital Management LP for $2.07 billion after the U.S. price of newsprint and magazine paper fell 6 percent in a year. The Finnish company’s stock rose the most since 2003.

Stora shares rose as much as 7.6 percent. The company said proceeds will be used to pay down debt. Cerberus will assume $450 million in debt in addition to the $2.07 billion payment for eight paper mills.

Now, oddly:

Falling demand for U.S. newsprint and magazine paper and the decline of the dollar against the euro made the mills in Wisconsin, Minnesota and Canada a drag on the Helsinki, Finland- based company. Stora, which cut 1,600 jobs and closed mills in Europe in the past two years, wrote down the value of its assets earlier this month amid rising wood costs and a worsening outlook.

Just what is Cerberus planning to do with it? Besides some hefty trimming (at least USD450m + interest worth). As Bloomberg points out, they had to deal with low value of the paper they have, recently:

Cerberus shelved a planned initial public offering for NewPage last year, citing market conditions. The owner of U.S. carmaker Chrysler LLC bought the papermaker two years ago for $2.3 billion.

Through the transaction, Stora will obtain 19.9 percent of NewPage, which will be headquartered in Miamisburg, Ohio. The holding “is considered as a financial investment and accounted for as an asset held for sale,” according to the statement.

That’s NewPage Holding Corp., the largest maker of coated paper in the US, also owned (held?) by Cerberus.

Apropos the decline in newspaper sales: (a) they’re shit – maybe if newspapers went back to being any good (someone please, please start a real national newspaper), they’ll (thank you, Hilary) sell more; and (b) Ted Rall worked that one out, too (go visit his site and read his wonderful comics):

Ted Rall

Basic economics. I’m sure what becomes of the NewPage and Stora paper mills will be anything but.


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