International Paper to sell 55% equity interest in IP-Sun JV

SPOKANE (Scrap Monster): The Memphis, Tennessee headquartered International Paper (IP) has announced its decision to exit its joint venture with Chinese Shandong Sun Holding Group Co., Ltd. The company is also planning to sell its corrugated box plants in the region.

According to company statement, it has already entered into an agreement with its Chinese joint venture partner to sell its 55% equity interest in the JV. The company expects to garner RMB 149 million (approximately US$23 million) in cash through equity sale. Following the completion of the transaction, IP will be able to cut its outstanding debt position in balance sheet significantly. The JV will be deconsolidated from IP’s consolidated balance sheet. The transaction is expected to complete in nearly six months, subject to approvals by the Chinese administration.

Upon exit from the joint venture, IP plans to seek new options to run its corrugated box business in China and Southeast Asian region. It has reportedly signed a non-binding letter of intent with a prospective local buyer in China.

The joint venture has one factory located in Yanzhou, Jining, Shandong. The company owns four advanced paper machines supplied by Finland Mesto with the total annual capacity of 1.4 million tons. The joint venture combines International Paper’s management and technology experience with Sun Paper Group’s local resources and in-depth understanding of local market. International Paper has 18 box plants in China and Southeast Asia, which employ nearly 3,000 people.

International Paper is a global leader in the paper and packaging industry with manufacturing operations in North America, Europe, Latin America, Asia and North Africa. Headquartered in Memphis, Tenn., the company employs approximately 65,000 people and is strategically located in more than 24 countries serving customers worldwide.