Inveresk to close Carrongrove mill, cut 150 jobs

Jun 14, 2005. /Lesprom Network/. Inveresk Plc announced the sale of its Gemini paperboard brand to Scottish paper producer Tullis Russell Papermakers Ltd. As part of the deal, Inveresk will sell their Gemini brand name and order book to Tullis Russell, also based in Scotland at Markinch, Glenrothes in Fife. Gemini is a well-established brand within the UK and mainland Europe in the coated board market where Tullis Russell are also already represented with their Trucard product. Both products are used in high quality cards, covers and packaging applications. Tullis Russell intend to take advantage of recent productivity increases to absorb much of the current Gemini sales into its own operation and will continue to invest strongly in the brand in the future. The move will help the company to secure its future by strengthening its competitive position and improving the mill's product mix. Production is planned to transfer fully to the Markinch operation by early November. The consideration for the transaction involves the sale of Intellectual Property and Related Assets as well as the provision of Services for combined proceeds of £13 million with further consideration of up to £2 million payable dependent upon the successful transfer of an agreed level of sales tonnes into Tullis Russell. Over time total cash generation for Inveresk of between £13 million and £15 million will be used to substantially eliminate bank borrowings which at 31st December 2004 stood at £15.7 million. Tullis Russell are part of the employee-owned Tullis Russell Group and employ around 540 people with annual sales of over £100 million. Over the last few years the Group have continued to invest strongly in their papermaking business as well as in their specialist coating operations and are able to make this acquisition on the back of another year of solid profitability and a strong net debt position. Giving his view on the deal, Tullis Russell Chief Executive Fred Bowden commented "Whilst we feel greatly for all impacted by the Carrongrove closure later this year, for Tullis Russell it represents an enormous opportunity to improve our performance and secure the future of papermaking jobs in Markinch. It also ensures the enhancement of the Gemini brand and safeguards supply for its many customers around the world." Inveresk's other mill at St Cuthberts in Somerset is unaffected by the sale and will continue to operate in its speciality fields of artist and inkjet papers in addition to its pre-impregnated resin based papers for the décor and furniture industries. Indeed, the company has recently appointed a new General Manager for the business in the shape of David Doorbar who has joined Inveresk after a distinguished 26 year career with Arjo Wiggins and has exciting plans for the development of the site's range of speciality products. Inveresk's real estate portfolio is likely to play a more prominent role in the future strategic development of the company's activities.