International Paper To Exit JV; Explore Options For Corrugated Box Business

(RTTNews) - Paper and packaging company International Paper Co. (IP) said Thursday that it has decided to exit its Chinese coated board joint venture and will pursue strategic options for its Asian corrugated box business.

Memphis, Tennessee-based International Paper has entered into a definitive agreement with its Chinese coated board joint venture partner, Shandong Sun Holding Group Co., Ltd., to sell its 55 percent equity stake in the joint venture, IP-Sun JV.

The joint venture has one manufacturing location in Shandong Province in China, which includes four paper machines and about 1.4 million annual metric tons of coated board capacity.

International Paper will receive RMB 149 million, or about $23 million, in cash as consideration for the sale, which is expected to be completed within the next six months.

International Paper also estimates the sale will result in net pre-tax noncash asset write-offs of about $200 million, to be recorded in the third quarter of 2015.

The company will also remove $400 million of outstanding debt from its balance sheet, along with the other assets and liabilities of the IP-Sun JV, following completion of the transaction.

International Paper said it is pursuing strategic options for its corrugated box business in China and South East Asia, and has signed a non-binding letter of intent with a prospective buyer based in China.

Mark Sutton, Chairman and CEO of International Paper said, "International Paper undertook a thorough review of its position in serving the Chinese and Asian markets. The Company remains committed to serving these very important markets, but concluded we could be more effective supplying this region with globally competitive products primarily through our Ilim joint venture in Russia and from the U.S."

IP closed Thursday's regular trading session at $41.09, up $0.80 or 1.99 percent on a volume of 2.84 million shares. However, in after-hours, the stock declined $0.04 or 0.10 percent to $41.05.