2008 Annual report - Sappi

sappi
ZAR8.9 billion), subject to a purchase price adjustment for
net debt and working capital. The transaction includes four
graphic paper mills – the Kirkniemi Mill and the Kangas Mill in
Finland, the Stockstadt Mill in Germany and the Biberist Mill
in Switzerland – and other specified assets, as well as all of the
know-how, brands, order books, customer lists, intellectual
property and goodwill of the coated graphic paper business of
M-real. In addition, Sappi will enter into the transitional marketing
agreements under which M-real will produce products at
certain graphic paper machines at the Husum Mill (Sweden)
and the Äänekoski Mill (Finland) and Sappi will market and
distribute those products. The transaction also includes longterm
supply agreements for wood, pulp and other services. The
acquisition will be financed through a combination of equity,
assumed debt, the cash proceeds from a rights offering and
a vendor note.
On 03 November, 2008, Sappi’s shareholders approved
the transaction and a rights offering to finance a portion of
the transaction. Sappi has also to date obtained various
regulatory approvals for the acquisition, including European
Union competition approval. The acquisition is expected to
close on 31 December 2008.
Sappi subsequently successfully completed a rights offering of
286,886,270 new ordinary shares at a subscription price of
ZAR20.27 per new share. New shares were issued in a ratio of six
(6) new shares for every five (5) Sappi shares held.
Conclusion
We will again strive to generate increased cash returns for
shareholders by optimising the main factors that management
has influence over and that contribute to increasing cash flow.
In this regard we will focus on improving operating profit and
thereby improving cash flow, and on optimising working
capital and debt levels. We will also again strive to mobilise
cash generated efficiently by carefully evaluating whether to
return cash to shareholders, to re-invest it in the company or to
repay debt.
In view of the current financial market turmoil, special attention
will be focused on the group’s liquidity in fiscal 2009.
M R Thompson
chief financial officer
23 December 2008
// 2008 Annual report
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