2008 Annual report - Sappi

sappi //
13. Joint ventures and associates* continued
Jiangxi Chenming
During 2005 Sappi acquired 34% of Jiangxi Chenming Paper Company Limited (Jiangxi Chenming) in a joint venture
arrangement. Jiangxi Chenming is established in the People’s Republic of China and is principally engaged in the
manufacturing and sales of paper and paper products. The annual financial statements of Jiangxi Chenming are to
31 December of each year. The last audited financials were to 31 December 2006.
Umkomaas Lignin (Pty) Ltd
A joint venture agreement between Sappi and Borregaard Industries Limited for the construction and operation of a lignin
plant at Umkomaas and the development, production and sale of products based on lignosulphates in order to build a
sustainable lignin business. The annual financial statements of Umkomaas Lignin (Pty) Ltd are to 31 December of each year
which is the year end of Borregaard. The last audited financials were to 31 December 2007.
Sapin S.A.
A joint venture agreement located in Belgium for the buying and selling of wood and wood chips to Sappi and other paper
manufacturers. The annual financial statements of Sapin S.A. are to 31 December of each year. The last audited financials
were to 31 December 2007.
Papierholz Austria GmbH
A joint venture agreement for the buying and selling of wood and wood chips to Sappi and other paper and pulp
manufacturers. The annual financial statements of Papierholz Austria GmbH are to 31 December of each year. The last
audited financials were to 31 December 2007.
VOF Warmtekracht
A joint venture agreement located in The Netherlands between Sappi and Essent for a co-generation electricity and steam
producing plant. The annual financial statements of VOF Warmtekracht are to 31 December of each year. The last audited
financials were to 31 December 2007.
Timber IV
In 1998, our interests in timberlands located in Maine and certain equipment and machinery were sold to a third party timber
company, Plum Creek Timberlands LLP, in exchange for cash of US$3 million and three promissory notes receivable in the
aggregate amount of US$171 million. In 1999, Sappi contributed these promissory notes to a special purpose entity (SPE).
The promissory notes were pledged as collateral for the SPE to issue bonds to investors in the amount of US$156 million.
This has been partially repaid as described below. The SPE is bankruptcy remote and serves to protect the investors in the
notes from any credit risk relating to Sappi Limited by isolating cash flows from the Plum Creek notes receivable. The structure
was set up to raise funding using the promissory notes as collateral in a manner that would not result in either debt or the
Plum Creek Timberlands LLP notes being reflected on balance sheet. This would not be the case if we monetised the
promissory notes through an issuance of secured notes directly or by an entity that was required to be consolidated in our
financial statements under the applicable accounting principles. In 2001, Sappi contributed its interest in the SPE to a limited
liability company in exchange for 90% of the outstanding limited liability membership interest. All voting control of the limited
liability company is controlled by an unrelated investor and therefore has not been consolidated by Sappi in its financial
statements. The SPE is not consolidated in our financial statements because we have taken the position that it is controlled
by an unrelated investor which has sufficient equity capital at risk. Sappi’s investment in the SPE is US$11 million as of
September 2008 (2007: US$11 million).
// 2008 Annual report
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