Adapack announces subsidiary closure

Despite a ‘remarkable sales volume increase achieved in 2006, and all efforts undertaken to improve the cost positioning and the production performance of its sites’, Adapack generated negative results since the beginning of the year, announced the company in a statement. Furthermore, a high average stock level also had to be financed which created some cash flow strains for the Group.

‘The escalating raw material, energy and transport costs could not be balanced by sales prices which remained stable,’ continued the statement.

‘Thus, in order to pursue its structuring efforts and to improve further its organization in the best possible conditions, Papeteries du Souche, subsidiary of Adapack, will be placed under the protection of the Commercial Court. This will give Papeteries du Souche a renewable six months period of observation.

‘Papeteries du Souche will use this period to finalize the optimization of its equipment, improve its efficiency performance and implement its new product range.

‘In parallel, Papeteries du Souche is committed to give its customers the best level of service. The goal will be to implement a continuation plan of its activity in the 1st half of the year.’

Adapack Intermills, sister company of Papeteries du Souche, is not involved in this procedure and continues normal activity.

Adapack is a young company and the fast growth of the Group was built through the acquisition of Papeteries du Souche, Adapack Intermills and, in 2006, the customer portfolio of the paper mill Moulin Vieux.

The new paper range, as well as the new information system, which were both introduced in 2006, is strong quality and service guarantees that will support Adapack to better serve its customers and restore its profitability in 2007.