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Completion of the sale of Norske Skog AS to Oceanwood

Investment funds managed by Oceanwood Capital Management Limited have now acquired 100% of the shares in Norske Skog AS following a lengthy process of regulatory approvals.

John Chiang, Oceanwood Partner and Investment Advisor, says: "We are pleased that the long process to close the acquisition of Norske Skog AS is now formally completed. Now that the financial restructuring and sales process have come to a conclusion, we look forward to working closely with Norske Skog's management, employees, and other key stakeholders to help strengthen the business. We share the ambition to ensure that the new Norske Skog group succeeds and realizes the potential that we believe lies in the Company through continued development of its core business and value-enhancing growth projects."

Lars P. S. Sperre, President & CEO of Norske Skog, comments: "With Oceanwood as a new strong owner, the Norske Skog group and our employees now have a unique opportunity to develop our core business and invest in promising new growth projects. We look forward to the cooperation with our new owners in the future. The completion of the sale marks the end of a very long financial restructuring of the formerly debt burdened Norske Skog group and is a new and exciting beginning for all our employees, owners, customers and suppliers. With a good operating environment for the core business and many promising development projects, I am optimistic about the future."

Transaction details

The net purchase price after adjustments was approximately EUR 236 million in cash. EUR 231 million is expected to be distributed to the holders of the EUR 290 million senior secured notes due 2019 (SSNs) and the lenders under the EUR 16 million liquidity facility (Liquidity Facility) shortly after closing, whilst the remaining balance will be held in an escrow account for a period of six months pending further potential price adjustments to be determined post- closing. Following the completion of the transaction, Norske Skog AS and its subsidiaries will be released from their remaining obligations under the SSNs and the Liquidity Facility. The discharge and release of payment obligations will improve the equity of the group, and following completion of the transaction, the group’s equity is estimated to be approximately NOK 2 000 million, providing an equity ratio of approximately 24%. Norske Skog AS and its subsidiaries will also be released from their relevant guarantee obligations under the EUR 159 and USD 61 million senior notes issued by Norske Skog Holding AS.

After completion of the transaction, the group will have gross interest-bearing third-party debt (i.e. excluding debt to companies controlled by the group's new owner Oceanwood) of approximately NOK 600 million, related to investments such as the biogas facilities in Norway and France and factoring financing of the group's trade receivables in France and Australia. As of 30 June 2018, the group's cash amounted to approximately NOK 700 million.

The group’s gross operating earnings for the last twelve months ending September 2018 is estimated to be just above NOK 1,000 million. Norske Skog will continue working to optimise the group’s capital structure further to reduce cost of capital and facilitate attractive financing of the group’s growth initiatives. Both the significant reduction in annual interest expenses and the simplified capital structure will materially improve the group’s financial flexibility going forward.

Sven Ombudstvedt, Chairman of the board of Norske Skog AS, says: “This is one of the most important milestones for the Norske Skog group over the last decades. It ends almost two years of vigorous efforts and commitment to find a sustainable solution for the Norske Skog group's operating business."

About Norske Skog

Norske Skog is a leading producer of publication paper with strong market positions in Europe and Australasia. The Norske Skog group is the third largest manufacturer in Europe and the only manufacturer in Australia and New Zealand.

Norske Skog owns seven profitable paper mills, strategically located near attractive markets. Total paper production capacity is 2.7 million tons, of which 1.8 million tons are newsprint and 0.9 million tons are magazine paper (super calandered and light weight coated).

About Oceanwood

Oceanwood is an independent investment management firm founded in 2006, located in London and Malta. The firm manages over USD 2 billion of capital, primarily for public pension plans and other institutional investors. Oceanwood is dedicated to investing in companies across Europe and employs a fundamental approach for its investments. The firm focuses on balance sheet sustainability and employs a constructive approach to working with management teams aiming to achieve positive results for all stakeholders.

28 September 2018

Norske Skog Communications and Public Affairs

Norske Skog press contact information:
Vice President Corporate Communications
Carsten Dybevig
E-mail: carsten.dybevig(at)norskeskog.com
Mobile: +47 917 63 117
Twitter: @Norske_Skog

Oceanwood press contact information Norway:
First House
Geir Arne Drangeid
E-mail: gad(at)firsthouse.no
Mobile: +47 913 10 458

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