TIDMPOWR

RNS Number : 9433P

Powerflute Oyj

23 November 2016

23 November 2016

Powerflute

Related Party Transaction

Powerflute Oyj ("Powerflute" or the "Company") announces that on 22 November 2016 it entered into a new EUR120 million intercompany loan agreement with Nordic Packaging and Container (Finland) Holdings Oy ("Bidco") (the "New Facilities") for the purposes of refinancing its existing interest bearing loans and borrowings (the "Existing Debt") under a facilities agreement dated 28 July 2016 arranged by Nordea Bank Finland (the "Existing Facilities").

On 14 November 2016, Bidco declared that its offer of 90 pence per share to Powerflute's shareholders announced on 15 September 2016 (the "Offer") had become unconditional in all respects. Upon the Offer becoming wholly unconditional a change of control event occurred which has resulted in a requirement for early repayment of the Existing Debt and replacement of the Existing Facilities.

In connection with the financing of the Offer, Bidco has put in place new financing arrangements for the enlarged Powerflute group of companies. In order to facilitate the repayment of the Existing Debt and to replace the Existing Facilities, Bidco has agreed to make available the New Facilities. The terms of the New Facilities are the same in all material respects as those of the Existing Facilities. The total availability of financing under the New Facilities is in aggregate EUR120 million, the maturity profile is 54 months and the interest chargeable on loans made under the facilities will be the applicable EURIBOR rate plus a margin of between 1.80% and 2.90%, dependent upon leverage. The initial interest margin is expected to be not more than 1.90%. There are no covenants applicable to borrowings under the facility and the circumstance that could give rise to an event of default are materially the same as those of the Existing Facilities.

Bidco is a substantial shareholder of the Company and accordingly the establishment of a new intercompany loan agreement between Powerflute and Bidco constitutes a related party transaction for the purposes of AIM Rule 13.

The Directors consider, having consulted with the Company's nominated advisor Numis Securities Limited, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. None of the Directors of Powerflute are involved in the transactions described above as a related party.

- Ends-

For further information, please contact:

 
 Powerflute 
  Dermot Smurfit (Chairman)                c/o Oliver Winters 
  Marco Casiraghi (CEO)                    FTI Consulting 
  David Walton (CFO)                       +44 20 3727 1535 
 Numis Securities 
  Mark Lander (Corporate Broking) 
  Andrew Holloway/Jamie Lillywhite 
  (Nominated Advisor)                      +44 20 7260 1000 
 FTI Consulting 
  Oliver Winters/Georgina Goodhew/Tom 
  Hufton                                 +44 20 3727 1535

About Powerflute

Powerflute is a paper and packaging group quoted on the AIM market of the London Stock Exchange (Ticker: POWR) which seeks to acquire businesses with strong fundamentals whose performance can be improved through a combination of management focus and targeted investment.

The Group has two main activities; Packaging Papers which trades under the name Powerflute and operates a paper mill in Kuopio, Finland producing a specialised form of Nordic semi-chemical fluting used in the manufacture of high-performance corrugated board; and Coreboard and Cores, which trades under the name Corenso and is a leading international manufacturer of high performance coreboard and cores, with coreboard mills in the United States and Europe and a network of core producing facilities in Europe, North America and China.

Nordic semi-chemical fluting is made from locally sourced birch, and boxes manufactured using it demonstrate superior strength and moisture resistance and are used for transportation of fruit and vegetables, high-value industrial goods such as electrical appliances and automotive components. The Kuopio mill is one of only three suppliers of Nordic semi-chemical fluting in Europe.

Cores and coreboard are manufactured from recycled paper and are used for applications in paper, packaging, textiles, steel, aluminium and many other industries. Coreboard and cores produced by Corenso demonstrate superior strength and rigidity and are suitable for use in the most demanding applications.

For further information, please visit www.powerflute.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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November 23, 2016 04:28 ET (09:28 GMT)

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