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NIB finances one of the world’s largest bleached softwood kraft pulp mill

In Sweden, the Nordic Investment Bank (NIB) and forest industry major company Svenska Cellulosa Aktiebolaget (SCA) have signed a SEK 1 billion (≈ EUR 96.37 million) loan agreement to finance the expansion of production capacity of bleached softwood kraft pulp at the SCA Östrand plant in the municipality of Timrå, Sweden. SCA has also signed a new credit facility of SEK 5 billion (≈ EUR 481.85 million), with existing financiers in a refinancing of currently undrawn credit facilities.

The SCA Östrand plant in Timrå Sweden (photo courtesy SCA).

NIB is an international financial institution owned by eight member countries – Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden –  and finances private and public projects in and outside the member countries.

The expansion will more than double softwood pulp production at the company’s Östrand facility from the current 430 000 tonnes to 900 000 tonnes. This will make the Östrand plant one of the world’s largest production line for bleached kraft pulp. The use of the workforce at the facility will remain almost the same, implying a doubling of labour productivity at the facility, measured in output quantities.

The by-products from the pulping process will increase significantly, annually yielding 17 000 tonnes of talloil and turpentine e.g. for production of biofuels and about 500 GWh of power, steam and district heat for external use.

The investment is expected to have notable implications for the forestry sector in Sweden, and add baseload energy to the local district heating system and to the Nordic power markets. The loan has a maturity of ten years.

Credit extension with financiers

In addition, SCA has signed a new credit facility agreement of SEK 5 billion with existing financiers. The new facility is a refinancing of the currently undrawn credit facilities of SEK 8 billion (≈ EUR 770.96 million) that was signed in 2017. The credit facility is primarily a back-up facility that will remain undrawn and serve as a liquidity reserve for the company.

The facility has a maturity of 5 years containing two extension options of 1 year each. Participating banks are Svenska Handelsbanken, Danske Bank, Skandinaviska Enskilda Banken and Swedbank where they all acted as “Mandated Lead Arrangers” and ”Bookrunners”, with Skandinaviska Enskilda Banken as “Co-ordinator”.

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