UFS announces execution of contract for new pulp mill

Posted: 11 April 2008 in Andritz, Indonesia, New pulp mills, United Fiber Systems (UFS)

On the day that Unifiber announced that it has executed the Engineering, Procurement and Construction Contract for its proposed 600,000 tonnes per year pulp mill, the share price fell by almost 12%.

On 8 April 2008, the UFS share price hit a 12 month high at $0.345. UFS issued a statement in response to a query from the Singapore Stock Exchange explaining that UFS “is not aware of any information not previously announced concerning the Company” which might explain the sudden increase in trading in company shares.

At the beginning of April 2008, Paramount Assets Investments Pte. Ltd. (a wholly-owned subsidiary of Lee Pineapple Company (Pte) Limited) bought large numbers of shares in UFS, increasing its stake to 6.49%.

China MCC20 Construction Co. Ltd. is to build the 600,000 tonnes per year pulp mill. MCC20 is responsible for financing 75 per cent of the total costs of the mill. UFS has still not arranged financing for the remaining 25 per cent of the project:

“Unifiber is currently procuring the financing for the Advance Payment and non-binding term sheets have been executed with two short-listed potential investors. The Company expects to move into selecting the most preferred financing structure and finalizing the terms, of which discussions were previously put on hold awaiting the execution of the EPC Contract with MCC20.”

The main machinery for the proposed pulp mill is to be supplied by Andritz (Finland). Construction is to start within 90 days of the contract date and the start of operations at the pulp mill is planned for 2010.

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