The Chinese company Lee and Man Paper Manufacturing announced on October 15 that it has sold its two subsidiary companies that owned Evergreen Pulp, to the British Virgin Islands company Worthy Pick Group Limited. The companies will be sold for HK$200 million (about US$26 million) – the amount which is to be transferred in seven payments through March 2010.
According to Evergreen Pulp's CEO David Tsang, the purpose of the deal is to remove debt from Evergreen and get bank financing. Actually, the pulp mill announced a temporary closure to begin this week, and the company laid off 15% of its 215-strong workforce. The remaining employees will return back to work if and when the mill fires up again.
The mill has invested more than $40 million in improvements into the plant since purchasing it, and was profitable for most of the time it operated under Evergreen. But as the pulp market tanked, the mill began to accumulate debts. By words of Tsang, the only way for Evergreen to pay those bills was to be divested from the Chinese company which had difficulties with getting credit. This was done by passing the company under control of Worthy Pick Group Ltd., listed as incorporated in the BVI on January 10, 2008, and engaged in the paper manufacturing business.
