Oct 22, 2009. /Lesprom Network/. UPM, Metsäliitto Cooperative, M-real Corporation, and Oy Metsä-Botnia Ab (Botnia) have signed an agreement according to which Metsäliitto's and Botnia's share of the Fray Bentos pulp mill and the eucalyptus plantation forestry company Forestal Oriental in Uruguay will be transferred to UPM. The companies signed a letter of intent concerning the restructuring on 15 July 2009, UPM said in a press release received by Lesprom Network. The enterprise value of the Fray Bentos pulp mill and Forestal Oriental totals approximately Euro 1.6 billion and the enterprise value of Botnia without the Uruguayan operations and shareholding in Pohjolan Voima Oy is approximately Euro 1.9 billion. UPM will finance the purchase consideration by selling an approximately 30% share in Botnia. In addition, UPM will take over the debt of the Uruguayan operations. Moreover, UPM will acquire 1.2% of the energy company Pohjolan Voima Oy from Botnia for Euro 66 million. Following the transaction, Metsäliitto's holding in Botnia will be approximately 50%, M-real's approximately 33%, and UPM's approximately 17%. UPM will have 91% ownership in the Fray Bentos pulp mill and 100% in Forestal Oriental. Completion of the transaction is subject to, among others, required regulatory approvals and agreements with lenders. These are expected to be finalised, at the latest, during the 1Q 2010. Botnia will remain to be in charge of the operations of the Fray Bentos pulp mill and Forestal Oriental until the transaction is effective. UPM's interest-bearing net debt has been estimated to increase by approximately Euro 350 million. The transaction is expected to have a minor impact on the gearing ratio. The net cash effect of the transaction on UPM will be an outflow of approximately Euro 90 million. The transaction is expected to have a positive impact on UPM's results in 2010. In the balance sheet in the interim report for January–June, on 30 June 2009, UPM has regrouped the 30% transferable share of Botnia's book value as assets held for sale. Consequently, from July 2009, UPM will not include the share of the transferable Botnia operations in the share of results of associated companies. Post transaction, UPM will record its 17% ownership in Botnia among its financial assets. "Following the deal, UPM will become a significant pulp producer. Our pulp production capacity will increase from 2.1 million tonnes to 3.2 million tonnes a year, with approximately one third being eucalyptus pulp. The share of plantation-based hardwood pulp in UPM's production will increase significantly, and the ownership of the Uruguayan plantation operations will increase our self-sufficiency in fibres," says Tapio Korpeinen, President of UPM's Energy and pulp Business Group. On the basis of the 17% holding in Botnia, UPM has a 400,000-tonne share of the pulp production capacity of Botnia's Finnish mills. In addition, Botnia acts as a sales channel for UPM's market pulp.