Sappi has concluded an agreement with Aurelius Investment Lux One (“Aurelius”) to divest its:
  • Maastricht mill (Netherlands) – lacked pulp integration and high cost mill: 260kpa CWF (80ktpa) and paper board (180kpta) sold to printers and packaging converters globally. This mill lacked pulp integration and accordingly high energy costs.
  • Stockstadt mill (Germany) – exiting the UWF market: Integrated pulp and paper mill producing 145ktpa of pulp to produce 220ktpa of UWF mainly sold into the European print market.
  • Kirkniemi mill (Finland) – reducing CM exposure: Integrated pulp and paper mill producing 300kpta of bleached mechanical pulp used to produce 750ktpa of CM used in the print publication industry globally.

The numbers

  • Deal EV: Total EV for the deal is EUR 272mn (EUR 212mn in cash retained receivables and EUR 60mn in assumed liabilities). Based on 12m EBITDA to 31 March 2022 (Q2 22A), this implies an EV/EBITDA of 4.7x (6.8x: Based on FY 19A). Loss after tax of EUR 6.5mn was incurred over the same period. This implies D&A charges of EUR 51.5mn or 44% of Sappi Europe’s total D&A.
  • NAV: As at 31 March 2022, NAV was EUR 396mn.
  • Timing: The deal is expected to close in FY Q2 23E.
  • Use of the proceeds: Initially, the cash proceeds of EUR 212mn (14% of Q3 22A net debt) will reduce net debt further, however, Sappi did flag this disposal will fast track growth initiatives but with the commitment to not incur any major CapEx projects.
  • Capacity changes: Pulp capacity -40% to 675ktpa; Graphic Paper -38% to 1,705ktpa (comprised of: CWF -5% to 1,375ktpa; CM -69% to 330ktpa & UWF -100%).
  • EBITDA contribution: In FY 19A, the 3 mills contributed 19% (12m ending 31 March 22: 31%) to Sappi Europe’s total EBITDA, yet the disposal will reduce their European Graphic Paper exposure by 38%.
  • Pulp integration broadly the same post the deal: We estimate pulp integration in Europe of c.58% before the disposal and 55% post.


  • Deal allows Sappi to increase strategic focus: The deal will enable Sappi to focus on the Commercial print market (for example, high end catalogues, brochures, business related i.e not publishing magazine/books), and flexible packaging, functional papers, self-adhesives (incl. glassine, labels and dye-sublimation markets).

Aurelius background 

Bottom line

  • We like the deal: Reduces Graphic Paper exposure (CM specifically), improves Sappi Europe’s cost position and further reduces gearing. REMAIN OVERWEIGHT.