BUILDING MATERIALS: Viisnurk Adds Another Particle Board Plant
24 Jun 2011 • by Natalie Aster
The Parnu-based furniture manufacturer Viisnurk doubled its particle board production capacity by acquiring a bankrupt plant in Pussi, the county of Ida-Virumaa, for EUR 4m.
Almost new production unit
The firm MKT Holding, belonging to the Finnish company Mejac, launched the construction of the Pussi plant in 2007 and started the production in 2009. Later the same year, the company run into financial difficulties and roped in Estonian investor KH Energia-Konsult. This was not enough to save the plant in times of recession and MKT Holding was declared bankrupt by the Estonian court in October 2010.
The original owners spent EUR 14.7m in construction and equipping the plant. The bankruptcy receiver tried to sell it initially for EUR 12.8m, but as no-one came to buy it, she lowered the price in the following auctions. In May, the price for a 4-y-o plant had dropped to EUR 4m, and then its former competitor, the stock exchange-listed Viisnurk, made the bid.
Thus, it looks like Viisnurk grabbed a real bargain – an almost new plant for one-fourth of its original construction price. "One could say so, yes, but actually it is not that rosy. The facility is new, but the equipment is reconditioned," says Andres Kivistik, CEO of Viisnurk, to news2biz. "I would rather say we paid market price."
Viisnurk plans to relaunch the Pussi plant with as small additional investments as possible, according to Kivistik. "It is possible that we may need to inject some money, EUR 0.2m or so. But in general, we plan to launch it as it was intended originally, without changing much," he says.
Viisnurk's staff is already unpacking the plant. The company plans to launch the Pussi plant later this year, relieving the pressure that lies on its Parnu particle board plant, which produces near maximum capacity at the moment.
Second plant adds efficiency
The purchase effiectively doubles the particle board production of Viisnurk. Its Parnu plant's capacity amounts to 70,000 cb.m of particle board a year, and the capacity of the Pussi plant is the same.
The product – particle board, produced of wood chips which are glued together with resin under high pressure – is also the same, or to be precise, almost the same. "Our Parnu plant is designed to produce the particle board with the thickness of 12 mm and over, while the Pussi plant is equipped to make a thinner board," explains Kivistik.
"At the moment, when our customers need a thinner board, we can produce it in Parnu, and we also do it, but this is not an efficient usage of the equipment. So, the acquisition of Pussi plant actually helps us to achieve greater efficiency – we can produce thicker boards in Parnu and thinner ones in Pussi," he adds.
Viisnurk is not planning additional large marketing efforts to sell its produce. "We already have clients on virtualy every market nearby. Hopefully we can market via existing channels all the produce of the Pussi plant as well," says Kivistik.
Viisnurk turned over EUR 13.9m in 2010, profiting EUR 0.8m. Exports constituted 83% of the turnover. The company has two production units: the furniture division and building materials division. The particle board production belongs to the latter. In addition, Viisnurk owns the Skano chain of 13 furniture stores in the Baltics and Ukraine. The furniture division provided 47.7% of the company's turnover in 2010, and that of building materials – 45.3%.
Viisnurk's shares are traded on the Tallinn stock exchange since 1997. The majority owner (59.6%) of the company is the investment firm Trigon Capital via the holding company Trigon Wood. Following the news of acquisition of the Pussi plant, the company's stock rose by 34.3% to EUR 1.8.
The above news abstract has been taken from a bi-weekly newsletter to professionals doing business in Eastern Europe "news2biz – Manufacturing".
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