UPM has signed an agreement to sell its Schwedt newsprint mill site and relevant assets to LEIPA Georg Leinfelder GmbH for the aim of a conversion into liner production. The entire personnel of Schwedt mill will transfer to LEIPA as old employees. The transaction price is EUR 70 million. The transaction is subject to customary third party approvals. As part of the transaction, the parties have agreed to enter into a contract manufacturing agreement for newsprint for a transition period which would end latest at the end of 2017. The mill's capacity is 280,000 tonnes of newsprint annually. LEIPA will convert the mill into liner production. The planned production capacity would be approximately 450,000 tonnes of liner annually.
Earlier, in September 2019, UPM announced the intention to sell its Chapelle newsprint mill in Grand-Couronne, France. It was communicated at the same time, that a process for the potential closure of the mill would be opened in case no credible offer would be received until mid-January 2020.
We have started the sales process in September and have been in continuous and substantial discussions with interested parties. While these discussions are still ongoing, we have not received binding offers by potential buyers of the mill to date.
Consequently, we informed employee representatives today of our intention to start the employee consultation processes for the potential closure of the site. These consultations are estimated to be concluded by end of Q2 2020 and will be conducted according to French legislation.
We will continue the sales process throughout the consultation process. We remain committed to selling the mill if we receive a suitable offer.
The mill currently employs 236 people with an annual production capacity of 240.000 tonnes of newsprint paper.