As consideration for the sale, the Company will receive RMB 149 million ($23 million) in cash. Additionally, the Company will remove approximately $400 million of currently outstanding debt from the Company's balance sheet, along with the other assets and liabilities of the IP-Sun JV, following completion of the transaction.
International Paper is pursuing strategic options for its corrugated box business in China and South East Asia and has signed a non-binding letter of intent with a prospective buyer based in China.
"International Paper undertook a thorough review of its position in serving the Chinese and Asian markets," said Mark Sutton, International Paper Chairman and CEO. "The Company remains committed to serving these very important markets, but concluded we could be more effective supplying this region with globally competitive products primarily through our Ilim joint venture in Russia and from the U.S."
The IP-Sun JV transaction is expected to be completed within the next 6 months, subject to satisfaction of closing conditions, including obtaining required Chinese governmental approvals. International Paper estimates the agreement to sell the Chinese coated board joint venture, which started in 2006, will result in net pre-tax noncash asset write-offs of approximately $200 million to be recorded in the 3Q 2015.
The IP-Sun JV has one manufacturing location in Shandong Province in China, which includes 4 paper machines and approximately 1.4 million annual metric tons of coated board capacity.
