Smurfit Kappa GrpPLC Statement re Deconsolidation of Venezuelan Operations
September 24 2018 - 9:00AM
UK Regulatory
TIDMSKG
Deconsolidation of Venezuelan Operations
SKG.I SKG.L
Dublin & London | 24 September, 2018: Smurfit Kappa Group
plc and a wholly-owned subsidiary Smurfit Holdings BV (together,
'SKG') confirm that due to the continuing actions and interference
of the Government of Venezuela, SKG is no longer able to exercise
control over the business of Smurfit Kappa Carton de Venezuela
('SKCV' or 'the Company') in Venezuela.
SKCV has been providing goods and services to its customers in
Venezuela for almost 65 years giving employment today to almost
1,600 direct employees and generating more employment indirectly.
During that time, the Company has operated to the highest business
and ethical standards, invested significant amounts of capital in
its business, developed a highly progressive Corporate Social
Responsibility program and dedicated significant financial support
and resources to the education and health of the less privileged
members of the communities in which the Company operates. Three
weeks ago, nine of the ten Company unions confirmed their support
and desire to continue working with SKCV as a result of its good
labour practices and compliance with local laws and
regulations.
SKG previously reported that the Government of Venezuela took
temporary control of the Company pursuant to an order that was
notified on 28 August 2018 ('the Occupation Order'). Following
receipt of the Occupation Order, SKG confirmed that it was
impossible for SKCV to manage its affairs in a way that complies
with its normal business standards and confirmed that as of 28
August 2018, SKCV was no longer responsible for the use of its
installations, machinery and equipment, its employees' safety, that
of its surrounding communities, any environmental impact, or the
quality of the paper and packaging manufactured in the
operations.
Since the notification of the Occupation Order, the Company has
been subject to Government interference, including through the
arbitrary harassment of its employees by the Directorate General of
Military Counterintelligence (or DGCIM) through unauthorised visits
which have the effect of intimidating the Company's workforce
resulting in increasing absenteeism. In addition, the Government of
Venezuela has arbitrarily arrested two of the Company's employees,
whose immediate and full release is being actively sought through
all available means.
In light of these circumstances, and in order to protect the
interests of its stakeholders and mitigate operating risks, SKG has
notified the Government that full responsibility for the Company's
operations and compliance with all applicable regulations have
passed to the Venezuelan State from the date of the notification of
the Occupation Order, namely, since 28 August 2018.
SKG and SKCV reserve all of their rights with regard to the
Venezuelan Government's actions and any subsequent State measures
under Venezuelan and international law including, without
limitation, the right to initiate international arbitration
proceedings to protect the interests of its stakeholders and seek
compensation for Venezuela's unlawful measures.
As a consequence of the loss of control over SKCV, the Group
will deconsolidate its Venezuelan operations in the third quarter
of 2018, resulting in a write down of net assets of approximately
EUR60 million for the Group. As noted in the Group's 2018 half year
results, SKCV represented less than 1% of the Group's EBITDA in the
first six months of 2018.
ENDS
Contact
Garrett Quinn FTI Consulting
Smurfit Kappa
T: +353 1 202 71 80 T: +353 1 7650886
E: E: smurfitkappa@fticonsulting.com
ir@smurfitkappa.com
About Smurfit Kappa
Smurfit Kappa, a FTSE 100 company, is one of the leading
providers of paper-based packaging solutions in the world, with
around 46,000 employees in approximately 370 production sites
across 35 countries and with revenue of EUR8.6 billion in 2017. We
are located in 22 countries in Europe, and 13 in the Americas. We
are the only large-scale pan-regional player in Latin America.
With our proactive team we relentlessly use our extensive
experience and expertise, supported by our scale, to open up
opportunities for our customers. We collaborate with
forward-thinking customers by sharing superior product knowledge,
market understanding and insights in packaging trends to ensure
business success in their markets. We have an unrivalled portfolio
of paper-packaging solutions, which is constantly updated with our
market-leading innovations. This is enhanced through the benefits
of our integration, with optimal paper design, logistics,
timeliness of service, and our packaging plants sourcing most of
their raw materials from our own paper mills.
Our products, which are 100% renewable and produced sustainably,
improve the environmental footprint of our customers.
Follow us on Twitter at @smurfitkappa and on LinkedIn at
'Smurfit Kappa'.
www.smurfitkappa.com
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