Kotkamills obtains 8¼% bondholder approval to lease sawmill operations

By Tali Rackner

Norfolk, Va., March 2 – Kotkamills Group Oy obtained approval from holders of its €105 million 8¼% senior secured callable bonds due 2020 to lease the company’s sawmill operations to a third-party tenant, according to a notice from bond trustee Nordic Trustee Oy.

As previously reported, Kotkamills Group, formerly Eagle Industries Oy, acquired Kotkamills Oy in March 2015. According to the issuer, it has since taken steps to improve the performance and profitability of Kotkamills by optimizing and developing some of its existing operations. As part of these efforts, the issuer is considering entering into the following transactions:

• At any time prior to Dec. 31, 2017, leasing Kotkamills’ sawmill operations and related equipment for a maximum of 10 years to a third-party tenant and transferring the administration and maintenance of the sawmill to the lessee for a monthly leasing payment provided that such monthly leasing payment will within 12 months exceed the current monthly profit (calculated based on the average monthly profit during 2015) generated by the sawmill;

• Transferring employees of Kotkamills currently working at the sawmill to the lessee;

• Selling the current sawmill inventory to the lessee at market price; and

• Assigning the existing delivery and customer contracts relating to the sawmill to the lessee.

The issuer estimates that the sawmill would require investments of about €5 million to €10 million to achieve desired capacity and profitability improvements. At the same time, the issuer estimates that an equivalent investment in the group’s other business lines would produce higher profits.

For the request to be approved, holders representing at least two-thirds of the adjusted nominal amount for which bondholders reply in writing must consent to the request. The proposed resolution obtained 100% of the votes.

Holders had until 11 a.m. ET on March 1 to submit their voting forms.

Helsinki-based Kotkamills Group makes laminating base papers, impregnated products, magazine papers and sawmill products.

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