Paperlinx Exits from Tasmania

Submitted by Jim Thesiger on 8 December, 2009 - 06:50

The Australia based communication paper manufacturing and packaging company Paperlinx (PPX) will turn into a pure merchant of paper products after taking the decision to shut down its Tasmanian manufacturing operations. After a 10 month long review, the company decided to shut down the Wesley Vale operation and some part of the Burnie operation. Instead of going for the complete closure of the Burnie operation, the company will look for a sale for the remaining parts of it. According to the company, this exit will allow Paperlinx to become a full merchanting company, with its operations distributing paper, sign and display and graphics materials and industrial packaging in Australia, New Zealand, North America and Asia and Europe.

The company is planning to complete its exit through two stages. The first stage is likely to be completed within March, 2010 and the second stage may get completed by June. The overall net cash cost is likely to be within the range of $10 million to $20 million in the event that both the sites are ultimately closed. The company authority is expecting the overall cost before revival of working capital and the sale of assets to be around $120 million which includes costs of redundancies and environmental remediation.

The managing director of Paperlinx Tom Park stated that, it was not all that easy for the company to take such a decision, but it was for the best interest of the investors and the company. He thanked the Tasmanian workers for their effort. Mr. Park also stated that the company was satisfied with the overall process since it managed to reduce the net cost of shutting down the Tasmanian operations from the previous estimation. It is to be mentioned that around 252 people will lose their jobs who were working in the Burnie and Wesley Vale mills due to the closure. In an announcement, the Paperlinx authority stated that as per the Enterprise Agreement or contract arrangements, the employees who will lose their jobs due to the closure will get complete entitlements and outplacement services.