KARACHI: The Finnish company Stora Enso on Wednesday decided to divest its holding in Bulleh Shah Packaging (BSP) in Pakistan, citing that company’s asset base in Pakistan with its product mix and related future outlook has become a non-strategic fit in the Stora Enso’s consumer board portfolio due to changed global growth outlook.
Stora Enso is a leading provider of renewable solutions in packaging, biomaterials, wooden constructions and paper on global markets.
In this regard, Stora Enso has signed an agreement to divest its 35 percent holding in the equity accounted investment BSP to the main owner Packages Ltd. The transaction is expected to be completed in the third quarter of 2017.
The cash consideration for the divestment of the shares is EUR 6 million ($8 million). The loss on disposal amounts in total to approximately EUR 19 million ($22 million). These will be recorded as items affecting comparability (IAC) in Stora Enso’s third quarter 2017 results, said the company.
“Stora Enso is focusing its strategy on delivering profitable growth. Due to a changing business environment in Pakistan, the BSP asset with its product mix and related future outlook is a non-strategic fit in our consumer board roadmap. Our focus is on high quality virgin-fibre products. We are committed to make a responsible divestment and intend to leave a positive contribution in the society,” says Stora Enso CEO Karl-Henrik Sundström.
Stora Enso will carry on with the Public Private Partnership with the International Labour Organization (ILO) to promote decent work and to combat child labour in the Punjab Province of Pakistan until the end of 2018. Furthermore, the group will continue to support its share of the two community investment programmes it has been funding in Pakistan. At Stora Enso’s request, an independent third party, KPMG Sustainability Services, is advising Stora Enso on responsible exit from Pakistan.
With this transaction, Packages Ltd. will achieve full ownership of Bulleh Shah Packaging Ltd.
The Joint Venture BSP, a collaborative vision of Stora Enso Oyj and Packages Limited, was established on May 31, 2013 with a $130 million investment plan to upgrade the mill and build a Biomass Plant for its Kasur operations. Packages Limited is principally engaged in the manufacture and sale of packaging materials and tissue products. Packages Ltd.’s market capitalisation is approximately $590 million. Stora Enso has a 6.04 percent shareholding in Packages Ltd.
It is important to mention here that child labour in supply chains in Pakistan remained a key challenge for Stora Enso. The company said in its sustainability report 2016 that human rights violations including child labour are prevalent in the agricultural sector in Pakistan, and also exists in the recycled fibre collection business in urban areas. The root causes of child labour and other human rights violations in Pakistan include widespread poverty, the lack of formal employment opportunities, ineffective law enforcement, and a lack of awareness of human rights, added the company.
Published in Daily Times, July 27th 2017.
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