UPDATED: Jens Ulltveit-Moe, one of Norway’s most well-known investors who’s lately become a climate activist, has emerged as among the bidders for Norwegian forestry firm and paper producer Norske Skog. While another major Norwegian industrialist ended up dropping out of the bidding process this week, Ulltveit-Moe sees a future for Norske Skog as a bio-energy company, and is putting NOK 5 billion on the table along with an international investor group.
Ulltveit-Moe told Oslo newspaper Dagens Næringsliv (DN) on Wednesday that the consortium he leads has participated in three bidding rounds for the company that finally was forced into bankruptcy just before Christmas because of heavy debt taken on during an international expansion phase many years ago. The company remains operationally viable and even profitable, however, with seven plants, two of which are in Norway.
“Now we’re in the last phase (of the bidding process),” Ulltveit-Moe told DN, adding that a decision was expected soon. He claims his consortium isn’t after short-term gains but rather has a long-term industrial plan for the company that now mostly produces newsprint and high-quality paper for magazines. He’s committing up to NOK 200 million himself, in order to obtain “a good stake” in the company.
“The plan is for me to step in as chairman of Norske Skog,” Ulltveit-Moe said. Most of the money behind his consortium’s bid is coming from two large funds managers, which he identified as Cyrus Capital in New York and Halcyon Capital in London.
Tom Hugo Ottesen, a Norwegian lawyer serving as bankruptcy administrator, has earlier told DN that between five and 10 serious players submitted bids for Norske Skog in two earlier rounds. Ulltveit-Moe said he knows nothing about the other bidders in the auction’s final phase. Fellow Norwegian industrialist Kjell Inge Røkke had expressed clear interest through his Aker concern in conjunction with hedge fund Oceanwood Capital Management, but Aker ended up announcing on Wednesday that it had dropped out of the bidding while Oceanwood remained involved. An Aker spokesman said Oceanwood and Aker did not reach agreement on the terms of a final bid.
Norwegian industrialist and investor, Christen Sveaas, who played an active role trying to save Norske Skog from bankruptcy, told DN after Aker’s announcement that “it’s natural to think that others have bid more, such that Oceanwood gets all its money back, and they aren’t so interested in owning Norske Skog alone.” He said he was “very surprised” that Røkke and Aker had dropped out of the auction process that they had been part of launching, and he called Aker’s withdrawal “sad.” Sveaas added that neither he nor his Oslo-based company Kistefos were taking part in the bidding process, because they were too small, and he wished Ulltveit-Moe “good luck” with his bid.
Ulltveit-Moe thinks it’s important that Norske Skog retains a Norwegian anchor as owner, and he has clear ideas for the company. He said paper production will continue to be “the key for a long time forward,” but he thinks the outlook for newsprint is “quite poor.” He thinks it’s “somewhat better” for magazine paper, which is what Norske Skog’s Saugbrugs plant in Halden, near Norway’s southern border to Sweden, produces.
“But we want to develop Norske Skog more and more in the direction of a bio-energy company,” Ulltveit-Moe told DN. “That’s where the future lies.” He said he also wants to develop Norske Skog as a Norwegian industrial firm, and thinks the prospects for both Norwegian plants are “very good,” also for the company’s firm in France.
A commitment to producing bio-energy would be climate friendly and provide demand for Norway’s vast supplies of timber. Ulltveit-Moe is among the new Norwegian investors in the oil-rich country who has involved himselv in large, climate-friendly investments.
“I’m very keen on forests and bio and climate-friendly solutions, but not so keen that I’m willing to throw away money,” he said. He sees real potential in Norske Skog and has been in contact with labour representatives at the company.
“For us, it’s positive that players come in who are serious (about industry) and want to invest in the company,” Svein Erik Veie of the labour organization Fellesforbundet’s local unit at Norske Skog Skogn told DN. He still believes in newsprint and magazine paper, claims Norske Skog’s employees have been “good at making ourselves cost-effective” and operating well despite all the turbulence around Norske Skog in recent months and years. A decision on who will take over the company may be made by the end of the week.