Stora Enso Completes the Divestment of Its Stake in The Dawang Paper Mill

Stora Enso completed the divestment – which was announced on 25 July 2019 - of its 60% equity stake in the Dawang Mill in China to its joint venture partner, Shandong Huatai Paper.

The transaction will not have any material impact on Stora Enso’s operational EBIT. Following the transaction, Stora Enso’s net debt will decrease by approximately EUR 22 million and annual sales by approximately EUR 60 million.

After this transaction, Stora Enso will have no paper production in China.

Interview with George Lu, Chief Partner at Shanghai Lanbai Law Firm

Please tell me about your involvement in the deal.

Basically, our law firm (Lanbai Law Firm) and I are mainly in charge of the employment settlement issues related to the ETC between Stora Enso (Stora) and Shandong Huatai Paper (Huatai), which includes the settlement plan formulation and execution. To be more specific, working with the project team at Stora, we succeeded in determining the direction of employee settlement and the final separation package. As a result, all 217 employees have signed the mutual termination agreement within three days after the closing date, with a reasonable and acceptable cost.

Why is this a good deal for all involved?

In the perspective of equity transfer, this decision seems unavoidable for Stora to prevent monetary loss, and for Huatai, they can make better use of this joint venture. From the perspective of employee relations, Stora managed to fulfil its final obligations before being unable to properly deal with employee related issues and pay the joint venture’s employees what they deserve (the separation package) according to their services in China. In contrast, Huatai did not accept most of the employees from Stora but were happy to see such separation in this area. Most employees were satisfied with the compensation they received.

What challenges arose? How did you navigate them?

Generally, the challenges came from two aspects, namely from Huatai and the employees. In the whole process of employee settlement, Huatai kept changing their decisions, including their ideas towards employees, their service years, and the severance package, and so on. My team and I continuously communicated with Stora’s project team and prepared specific plans for every decision Huatai made. The most important thing is when some of Huatai’s ideas were not meeting the legal requirement, Stora and our firm stuck to the decisions we originally devised. As for the employees, most of them were willing to accept the settlement plan, while a few of them tried to ask for more. Through the negotiation between our lawyers and the employees, these problems were finally solved.

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