Inveresk, the Scottish papermaker, has cut its debts by more than half in the past four months following the disposal of loss-making mills. The Stirlingshire-based firm, which switched its listing from the main London stock market to the Alternative Investment Market in December to restructure its finances, has reduced its debt from #21 million at the end of October to #8.9 million. It has done this by selling off its loss-making graphic paper mill at Caldwells, Inverkeithing to Swedish firm Klippan and the closure of its head office in Denny, Stirlingshire. This followed the sale in December of land and buildings at its former mill at Westfield for #825,000. Chief executive Alan Walker said yesterday: "Following the restructuring we have closed our head office and are now operating two profitable mills at Carrongrove in Denny, Stirlingshire and St Cuthbert's. "We are now back on an even keel, both mills are trading according to plan with order books significantly ahead of this time last year." Last month the firm raised #2.2 million through an unsecured loan from managing director Alan Walker, Klippan and two of its directors, Stefan Lersten and Jan Bernander. This loan, in order to further reduce group indebtedness, is to be converted into new Inveresk shares at a price of 10p each. The company, which is unhappy with its present bankers, Royal Bank of Scotland, said it has received approval for working capital and an eight-year term loan facilities from a "major international banking institution". Walker would not disclose the identity of the bank but did say that it would be "parting company with RBoS in the next few months." The second phase of its recapitalisation exercise is scheduled to take place next month via a placing and open offer of new ordinary shares on similar terms to the earlier placing announced in December 2002. Inveresk began and then cancelled merger talks with its Swedish rival and majority shareholder, Klippan, in November. Its value has slumped dramatically and it now has a market capitalisation of about #6.5 million. Yesterday Walker remained upbeat, saying that the restructuring would be complete by April by "which time the group would be in good shape with two mills running profitably".