Stora Enso has signed an agreement to dispose of the coated mechanical paper mill to Hagen-Pulp & Paper for a cash consideration of €23m (£17.8m), amounting to a loss of €15m (£11.6m).

The German site produces some 485,000 tonnes of lightweight and medium-weight coated paper annually. It employs around 540 people who will transfer to the employment of Hagen-Pulp & Paper, a newly established business backed by a group of German investors including graphic paper producer Kübler & Niethammer Papierfabrik Kriebstein. The site will continue to produce coated mechanical paper, according to Stora Enso.

Stora said the transaction will complete during the next quarter and is expected to reduce annual sales by around €300m (£233m), with an estimated impact on operating profit of around €5m (£3.8m).

Production of Stora Enso’s coated mechanical paper will continue solely under the NovaPress brand at Veitsiluoto Mill in Finland. 

The move is the latest in a string of disposals by the group as it moves through its ‘strategic transformation’ into a renewable materials business with a focus on consumer board, packaging products, biomaterials and wood products. 

It follows the sale last week of UPM’s Schwedt newsprint mill to Leipa Group for around €70m (£54m), which intends to transform the site for liner production for packaging products. All 240 employees were transferred under the terms of the deal. 

With a current newsprint capacity of 280,000 tonnes annually, it is projected that after its conversion the mill will be capable of producing 480,000 tonnes of liner per year.

The initial focus will be uncoated white top Testliner, the firm said, with production slated to start in the fourth quarter of 2017.