International Paper

History

2023

Employee layoffs and $664 million write-off due to US crisis

On October 18, 2023, the American company International Paper, the world's largest supplier of cardboard, announced a reorganization aimed at "strengthening and optimizing the production system." Due to the crisis in the United States and the difficult macroeconomic situation, the company is forced to reduce the number of personnel and stop part of the production capacity.

During the restructuring, International Paper will lay off approximately 900 employees. It is noted that wherever possible, the company offers employees alternative positions. In addition, International Paper seeks to reduce staff primarily through natural processes, such as retirement or voluntary layoffs. Affected employees will receive monetary compensation and other due payments, as well as assistance in employment in a new place. The costs associated with this process are estimated at $664 million in the fourth quarter of 2023.

International Paper Announces Reorganization

Decisions like this are extremely difficult because of the impact on our employees and their families. However, these actions are necessary to strengthen the business and improve competitiveness. We strongly believe in the company's long-term prospects, "International Paper said in an official statement.

As part of the reorganization, the container board plant in Orange (Texas) will be permanently closed. In addition, the company will completely curtail production on pulp and paper lines No. 20 in Rigelwood (North Carolina) and No. 4 in Pensacola (Florida). This will lead to a decrease in the capacity for the manufacture of packaging cardboard by about 800,000 tons per year. The remaining production in North America will include 17 plants with an annual output of 13 million tons. Pulp production will decrease by 500,000 tons per year, and the existing eight plants will provide production at 2.7 million^[1]

Sale of 50% Ilim to Russian partners for $484 million

In March 2023, a sub-commission of the government's Foreign Investment Monitoring Commission in the Russian Federation authorized International Paper to sell its stake in the Russian entity, thus removing the last significant obstacle to closing the transaction. Within its framework, 50% of the shares of the Swiss holding company Ilim SA are being sold (a joint venture that owns more than 96.37% of the shares of Zakhar [[Ilim Group (ILIM)|Ilim Group). The buyers were Russian partners of International Paper (IP) Smushkin and Boris Zingarevich JSC, said Viktor Yevtukhov, deputy head of the Ministry of Industry and Trade.

It is noted that by March 27, 2023, the deal is in the final stage. The parties expect to close it in April 2023, but the process is carried out in a "changing political and regulatory environment," which may affect the timing, Ilim said in a statement quoted by Interfax.

Russia's largest foreign timber investor to sell 50% in Ilim Group to Russian partners

American International Paper, the largest foreign investor in the forest industry, in Russia January 2023 announced that it would sell 50% in the "" group to Ilim Russian partners for $484 million. International Paper acquired this stake more than 15 years ago for $650 million.

The cost of the entire Ilim by March 2023 is estimated at about $3.5 billion based on a multiple of 3.1 to EBITDA at the end of 2022 (according to preliminary unaudited data, this indicator for the group amounted to $1.11 billion), the value includes net debt in the amount of $2.45 billion.

Ilim is one of the largest pulp and paper companies in Russia. The majority (about 70%) of Ilim's products are exported. According to the company, its share in the Russian market for commercial pulp is 75%, in the market for cardboard and paper - 20% and 10%, respectively. International Paper is the world's largest pulp and paper product (by March 2023). The company specializes in corrugated cardboard packaging, as well as cellulose for diapers, paper wipes and other personal care products.^[2]

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