billerud_presentationppt

1
BILLERUD Leading Niche Group Speciality
Packaging Paper
October 27, 2000
2
BILLERUD - Motives

• Substantial synergies and integration effects are
  expected to result in improved profitability
• The new company will have competitive market
  positions
• Billerud will have the necessary critical mass
  for further development
• Creates a new independent player
• Creation is in line with the respective
  strategies of AssiDomän and Stora Enso

3
BILLERUD - Leading in Speciality Packaging Paper
AssiDomän
Stora Enso
Karlsborg
BILLERUD MSEK 6,200 1.280 ktonnes
Gruvön
Skärblacka
630 ktonnes
Kraft Paper
Container - board
Market Pulp
650 ktonnes

• Relative value of transferred assets
• Stora Enso 47.5
• AssiDomän 52.5

4
BILLERUD - Production Facilities

• Capacity 1,280 ktonnes
• 3 mills
• 11 PMs

Gruvön
Karlsborg

• Sales MSEK 6,200
• 83 of sales in EU
• 2,400 employees

Skärblacka
5
BILLERUD - Distribution of Sales SEK 6.2 bn
Containerboard 21
Kraft Paper 61
Market Pulp 18
6
BILLERUD - Capacity
Billerud 1,280 ktonnes
330
Gruvön 630 ktonnes
Skärblacka Karlsborg 650 ktonnes
460
Market Pulp
85
245


Container- board
90
370
490
315
175
Kraft Paper
7
BILLERUD - Breakdown Paper Capacity
Total Capacity 1,280 ktonnes
8
BILLERUD - Estimated Synergies and
Integration Effects

• A total MSEK 200 in full year synergies and
  integration effects
• Full effect 2003
• The bulk of the positive effects stem from
  product specialisation and transfer of products
  and a minor part from rationalisation of
  administration and sales

9
BILLERUD - Synergies Breakdown

• MSEK/Year
• Product specialisation and transfer of
  products 160
• Rationalisation of administration and sales 55
• Corporate cost, new organisation -15
• TOTAL 200

10
BILLERUD - Quality Assets

• Assets in excellent condition
• Capital expenditure 1995 -2000
• Gruvön SEK 2.6 bn
• Karlsborg/Skärblacka SEK 2.4 bn
• Total SEK 5.0 bn
• Proforma book value fixed assets 4.3 bn
• Average capex to depreciation ratio 1995 -2000 of
  260
• Limited future capex

11
BILLERUD - Capex to Depreciation Ratio
12
World Kraft Paper Market - SEK 38 bn
SEK 1,320 bn
SEK 450 bn
100
4
Other materials
Glass bottles and containers
8
Other Paper Products
22
90
SEK 90 bn
Metal Substrates and Containers
80
18
70
29
Paper and Board
Folding carton
60
34
50
38 bn
52 bn
40
30
Kraft paper 42
49
20
Sack paper 58
Corrugated Board
36
Rigid and Flexible Plastics
10
Total packaging
Paper Board
Source Management estimates
13
BILLERUD Proforma Balance Sheet, prel
MSEK Fixed assets 4,300 Current
assets 1,650 Total Assets 5,950 Equity 2,200 Int
erest bearing debt 2,650 Other liabilities 1,100 T
otal Equity Liabilities 5,950 Net interest
bearing debt 2,650 Net debt/Equity ratio
1.2
14
BILLERUD - Capital Structure, prel

• Initial net gearing around 1.2x equivalent of
  MSEK 2,650
• Stora Enso to insert interest bearing debt of
  MSEK 1,150
• AssiDomän to insert interest bearing debt of MSEK
  1,500
• Financing on own merits
• External financing of debt
• Possible shareholder loans to be amortised ahead
  of, or converted to, equity at time of IPO
• Dividend policy to reflect focus on cash flow and
  low investment level

15
BILLERUD - Proforma Profit Loss Account, prel
1998 1999 H1 2000 Net turnover 5,487 5,396 3,200
EBITDA 621 629 712 EBITDA-margin 11.3 11.7 22.2

Depreciation is expected to amount to
approximately 350 MSEK.
16
BILLERUD - Group EBITDA - 1994 - H1 2000
Average EBITDA margin 18,2
) Full year figure calculated according to H1 x 2
17
BILLERUD - Governance

• Domicile and head office in Stockholm
• Board structure
• Chairman and six members two independent and two
  each from Stora Enso and AssiDomän.
• CEO
• Representatives of Unions

18
Creation of BILLERUD

• Intended start January 1st, 2001
• Relative value of transferred assets - Stora Enso
  47.5
• - AssiDomän
  52.5
• 50/50 ownership, difference in value to be
  adjusted by transfer of interest bearing debt
• Intended listing 2001/2002 on OM Stockholm Stock
  Exchange
• AssiDomän to dividend according to Lex-ASEA
• Long-term, Stora Enso will exit Billerud
  ownership, and the intention is to sell 20 in
  connection with the listing of Billerud
• Effect on book values - Stora Enso write down
  MSEK 600
• - AssiDomän no effect
• Billerud merger subject to approval from relevant
  competition authorities

19
A good solution

• Stora Enso will be more focused
• Capital will be released to be used for core
  businesses
• The sold assets will form a part of a new company
  concentrating on a focused segment of packaging
  papers

20
(No Transcript)
21
(No Transcript)
22
AssiDomän motives for BILLERUD

• Review of structure initiated in 1999
• Conclusion - a need to focus operations
• Therefore a need to exit some business areas
• Have been on the look-out for opportunities to
  create better and stronger structures for these
  products

23
AssiDomän motives for BILLERUD

• Billerud, indeed becomes a stronger company than
  the separate units Karlsborg and Skärblacka
• This is a step in the continued streamlining of
  our business that is expected to unlock hidden
  values in our company