Finnish UPM and Indonesia's RGM set up alliance

Finnish UPM and Indonesia's RGM set up alliance

HELSINKI (Reuter): Finnish UPM-Kymmene said yesterday it was creating a strategic alliance with Singapore-based APRIL Fine Paper, a subsidiary of Indonesia's RGM International, for fine paper production in Europe and Asia.

It said in a statement the two were swapping 30 percent of fine paper operations in a non-cash deal.

"Under this alliance, UPM-Kymmene and APRIL (Asia Pacific Resources International Holdings Ltd) will swap 30 percent of their respective fine paper operations in a non-cash transaction," UPM said in a statement.

The alliance agreement was signed by APRIL's Chairman Sukanto Tanoto and UPM-Kymmene's President Juha Niemela.

APRIL, whose corporate and administrative offices are headquartered in Singapore, is a key Asian producer of pulp, paper and rayon fiber with plants in Indonesia's North Sumatra and Riau provinces.

It is a subsidiary of RGM International which is majority owned by the Sukanto family.

APRIL controls two major companies -- PT Inti Indorayon Utama, a pulp and rayon fiber producer in North Sumatra which is listed both in the Jakarta and Surabaya stock exchanges and PT Riau Andalan Pulp and Paper which operates a 750,000- ton pulp mill in Riau.

"The agreement will enable UPM-Kymmene to gain immediate access to the rapidly expanding Asian fine paper market, where fine paper consumption is forecast to increase by three million tonnes by the turn of the century," UPM said.

UPM would hold 70 percent of the European part of the alliance and APRIL 70 percent of the Asian part, it said.

APRIL will gain access to UPM's fine paper research, production know-how and marketing expertise, ensuring the successful start-up and future performance of its Asian fine paper operations, it said.

"In Europe, UPM-Kymmene would hold 70 percent and APRIL 30 percent of a new company, UPM-Kymmene Fine Paper, which will comprise UPM-Kymmene's fine paper units, Nordland Papier in Germany and Kymi in Finland," it said.

"The new company is the largest fine paper producer in Europe with a combined annual capacity of 1.7 million tons of paper and 460,000 tons of related pulp," it said.

"Similarly, in Asia, APRIL will hold 70 percent and UPM- Kymmene 30 percent of a new company, APRIL Fine Paper, which will comprise APRIL's paper mills under construction in Sumatra, Indonesia and Changshu, near Shanghai, China," it said.

These would come on stream in 1997 and 1998 with a combined capacity of over one million tons of fine paper year, it said.

"The parties intend to implement the proposed alliance by year-end, after regulatory and other approvals have been received," it said.

APRIL and Hansol Paper Co. Ltd. of South Korea also set up a joint venture paper company in May, 1996 to build a US$650 million paper industry in Riau.

The joint venture company, called Riaupaper, is 70 percent owned by APRIL and 30 percent by Hansol.