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Wednesday, May 29, 2024

Forestry firm’s fate may lie with state

Shares in crisis-ridden forestry firm Norske Skog rebounded this week after Prime Minister Erna Solberg wouldn’t rule out contributing to a rescue plan for the last major receiver of timber in Norway. While some wealthy forest owners and investors seem to welcome state assistance, others warn against it.

Norway’s large timber industry is facing the loss of processing plants if Norske Skog shuts down operations in Halden and Skogn. Speculation is swirling over the prospects for a state bail-out. PHOTO: Landbruks- og matdepartementet

The fate of Norske Skog is likely to set off debate within Norway’s minority coalition government that Solberg still leads. Carl Otto Løvenskiold, who owns most of the forest land north of Oslo, told newspaper Dagens Næringsliv (DN) that he fears a threatened shutdown of Norske Skog’s plants in Halden and Skogn. That would mean timber, once one of Norway’s most important resources, would need to be sent abroad for processing or conversion into paper.

“It will be demanding for us and for the timber industry if Norske Skog’s capacity is wound down,” said Løvenskiold, who’s a major donor to Solberg’s Conservative Party. DN reported that Løvenskiold has contributed NOK 200,000 (USD 25,000) to the Conservatives’ re-election campaign this year.

Kristian Siem, a Norwegian investor and businessman living in London, also said there are “situations where it’s correct for the state to help on a temporary basis.” Bertel Otto Steen, the heir to a major car import business in Norway who’s become Norske Skog’s largest private shareholder, also said that a state bail-out was a “completely correct thought, regardless of which party wants it.” He told DN it was “exciting” that Norwegian politicians were evaluating crisis aid for Norske Skog.

‘Government must not meddle’
Industrialist Christen Sveaas, a forest owner himself and major donor to both the Conservatives and Solberg’s government partner, the Progress Party, has a different opinion. “The government must not meddle in this case,” Sveaas wrote in an email to DN. He’s confident that Norske Skog’s plants can continue to operate without the state’s help, even if Norske Skog declares bankruptcy.

“The state owns enough as it is within Norwegian business,” Sveaas told DN. “If there’s a bankruptcy, either the creditors, competitors in Sweden or Finland or other Norwegian owners will take over.”

Finance Minister Siv Jensen, who leads the Progress Party, refused to comment on the issue at a meeting with foreign correspondents in Oslo on Thursday. “I’m expecting a full briefing on this,” Jensen said, adding that she thus didn’t want to answer any questions about the fate of Norske Skog.

The company has been struggling for years with heavy debt after it made a series of acquisitions and became one of the world’s largest producers of paper. Norske Skog has been going through several rounds of negotiations with creditors and debt holders and just got a new CEO, but as of Thursday had not succeeded in finding any long-term financial solution. Its capital has been exhausted and its share price had sunk until this week’s rebound after Solberg’s remarks. The company itself has delivered good fundamental operating results, though, and has until August 11 to come up with a work-out plan. Berglund



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