Hengan Luxembourg, a subsidiary of Chinese personal hygiene products maker Hengan International Group Co. Ltd., agreed to purchase 36.46% of the total issued share capital of Finnish pulp mill firm Finnpulp for about €11.7 million.
According to an April 23 regulatory filing, Hengan Luxembourg will subscribe for 5,833,333 new shares of Finnpulp at €2 per share. It has the right but not the obligation to subscribe for additional new shares of Finnpulp to raise its stake up to 49%.
Finnpulp is a company planning to build a large-scale bioproduct mill in Kuopio, Finland. The target of the planned mill is to produce approximately 1,200,000 tons of northern bleached softwood sulfate kraft pulp annually for global markets, and other bioproducts.
The whole project is estimated to cost approximately €1.4 billion, 40% of which will be financed by equity and the remaining 60% will be financed by debt.
Hengan, which produces box tissue papers and diapers, said the deal will allow the group to expand its business to the upstream pulp and bioproduct manufacturing industry to stabilize the supply of wood pulp in the future, which it believes will enhance their long-term development.
As part of a shareholders' agreement with Finnpulp, Hengan Luxembourg will have the right to nominate three of nine directors in the Finnish company upon the completion of its initial investment.
