UK LISTED packaging group Powerflute, which is headed by Irishman Dermot Smurfit, yesterday announced the sale of the Papierfabrik Scheufelen group of companies in Germany for €38.5 million to Paper Excellence.
This comprises cash of €32.5 million, payable in two instalments this year, and €6 million in debt, which is being assumed by the acquirer.
Powerflute said this represented a “significant return” on its investment in Scheufelen.
It said €9 million would be used to reduce its borrowings. This will result in Powerflute moving to a net cash position of €5 million.
The companies sold by Powerflute reported an underlying operating loss of €6.2 million on sales of €205.1 million in 2010.
“On completion of the disposal, Powerflute will be debt free on a net basis and will have the capital structure and resources to continue to pursue its strategy of seeking opportunities to acquire underperforming businesses in the paper and packaging sectors,” Mr Smurfit said.
Powerflute’s shares rose by more than 23 per cent in London yesterday to 18.75 pence. It floated on the Aim market in London in May 2007 at 110 pence a share.Powerflute operates a paper mill in Finland and manufactures Nordic semi-chem fluting.
This is made from birch wood sourced from Finland and Russia and is used to manufacture boxes for fresh and frozen produce.
Mr Smurfit, a former deputy chairman of the Irish Jefferson Smurfit packaging group (now part of Smurfit Kappa), owns 7.73 per cent of Powerflute’s shares while his brother Michael Smurfit controls 12.6 per cent through a company called Bacchantes.
In March, Powerflute postponed the publication of its 2010 results. But it said it achieved Ebitda of €12.4 million on revenues of €310.6 million for the year.
