International Papers to reportedly buy stake in West Coast Paper Mills

“The media had reports that International Paper is in negotiation to buy out promoters’ majority stake in West Coast Paper Mills Limited. The Exchange, in order to verify the accuracy or otherwise of the information reported in the media and to inform the market place so that the interest of the investors is safeguarded, had written to the company. West Coast Paper Mills Limited has vide its letter inter-alia stated. We would like to inform that as far as we know there is no such proposal on part of the promoter,” said the statement issued by West Coast Papers.

Moneycontrol.com reports that S K Bangur Group hold 54.77 percent stake in West Coast Paper as on September. Recently, on 23 November, The Hindu Business Line had reported, and I quote, “Sources close to the promoters, told Business Line that Rama Newsprint & Paper, another S.K. Bangur group outfit in which West Coast has over 36 per cent stake, is actually up for sale and not the West Coast.”

Recently, Rama Newsprint and Papers had reported a sales turnover of Rs 76.96 crore and a net loss of Rs 17.22 crore for the quarter ended September 2012. For the quarter ended September 2011, the sales turnover was Rs 80.41 crore and net loss was Rs 20.35 crore.

Similarly, West Coast Paper Mills had reported a sales turnover of Rs 364.48 crore and a net profit of Rs 7.80 crore for the same quarter ended September 2012. For the quarter ended September 2011, the sales turnover was Rs 342.27 crore and net loss was Rs 2.80 crore.

In October last year, International Paper was in news for acquiring 75% stake in Andhra Pradesh Paper Mills (APPM). International Paper purchased 53.5 percent of the APPM shares from APPM promoter, L.N. Bangur and related family members and affiliates for approximately US$226 million in cash (based on an average Indian Rupee to U.S. Dollar exchange rate of INR 48.25 per US$).

These sellers had also entered into a covenant not to compete, for which they received a cash payment of US$57 million. In addition, International Paper acquired an additional 21.5 percent of APPM shares in a public tender offer completed on 8 October 2011, for approximately US$105 million in cash.