GERMANY -- Stora Enso says it has signed an agreement to divest its Kabel coated mechanical paper mill in Germany to Hagen-Kabel Pulp & Paper GmbH, owned by a German based investor group.

The company said that the transaction is in line with Stora Enso's strategic transformation into a renewable materials growth company. The transaction is expected to be completed in the third quarter of 2016.

The cash consideration for the divestment of the assets is approximately EUR 23 million, subject to customary closing day adjustments. The loss on disposal amounts in total to EUR 15 million. The effect on operating profit is approximately EUR 5 million, and negative tax impact is approximately EUR 10 million. These will be recorded as a non-recurring item in Stora Enso's second quarter 2016 results. Approximately EUR 17 million of pension liabilities will be transferred to the new owner with the transaction.

"Kabel Mill has an excellent reputation and an established customer base in the grades it produces. We believe that Kabel Mill will be able to further develop its business under the new ownership," says Kati ter Horst, EVP Paper division at Stora Enso.

Based on 2015 annual figures, the divestment is expected to reduce Stora Enso's annual sales by approximately EUR 300 million. It will also reduce Stora Enso's annual paper production capacity by around 485 000 tonnes. Kabel Mill employs approximately 540 people, who will be transferred to the new owner with the divestment. The transaction will not have a material impact on Stora Enso's operational EBIT going forward.

Stora Enso will continue to produce coated mechanical paper under the NovaPress brand at its Veitsiluoto Mill in Finland.

About Hagen-Kabel Pulp & Paper GmbH

Hagen-Kabel Pulp & Paper GmbH is a newly-established company owned by a German investor group with experience in the paper industry. One of the investors, Kübler & Niethammer Papierfabrik Kriebstein AG ("K&N"), produces graphical paper with a capacity of approximately 100 000 tonnes per year and recycled paper as raw material. The investor group has stated that it aims to develop the Kabel Mill and focus further on high quality customer service.