Newspaper and magazine paper manufacturer Norske Skog is seeking to restructure its rapidly rising debt, which has now reached $1bn, as prices it can achieve for newsprint plummet in Europe and Asia.

The Norway-headquartered company says its finances went into a downward trajectory this year following a sharp decline in the value of the Norwegian krone and a tumultuous year of business.

Norske Skog has seven paper mills, two of which are in Australia, in Albury NSW and Boyer Tasmania. The Sydney sales office for Norske Skog is responsible for supplying approximately 600,000 tonnes of paper to publishers and commercial printers around Australia, much of which comes from those  mills.

Norske Skog chief executive Sven Ombudstvedt put blame on the falling krone value and says the company needs to strengthen medium-term capital through the restructuring.

“The sharp weakening of the Norwegian krone has increased the net interest bearing debt and squeezed our book equity to an unacceptable level,” he says.

The firm says they want to persuade holders of senior loan notes to switch to new unsecured notes that mature in 2019, and to amend the terms of other existing notes that mature between 2016 and 2023.

Ombudstvedt says the attempts to de-leverage will protect finance for the company’s stakeholders, and will contribute to improvements in next year’s profitability

“If the transaction is successfully completed, we can avoid a comprehensive balance sheet restructuring in the foreseeable future,” he says.

“We believe that the successful completion of the transaction will protect value for all our stakeholders.”

The papermaker’s share price is down 9 per cent to NOK2.10.

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