By Tarmo Virki and Sakari Suoninen
HELSINKI (Reuters) - Struggling Finnish fine paper maker M-real (MRLBV.HE: Quote, Profile, Research, Stock Buzz) is confident it can renew its large revolving credit line despite turmoil in the credit market, its chief financial officer said on Thursday.
"We are confident that through the restructuring program that we have been running successfully since 2006 we will not face major problems (of renewing the credit line)," CFO Seppo Parvi told the Reuters Paper Summit.
M-real, which has reported pretax losses for the last five years, has been restructuring since 2006, slashing annual costs by some 300 million euros ($440 million).
However, its annual costs have risen even faster as timber and energy prices have soared.
"Our liquidity remains strong ... We don't see any problems or threats on the liquidity side or finances side," Parvi said, noting the company's balance sheet had strengthened due to divestments.
Parvi said the company would start talks with banks this year on renewing its 500 million euro revolving credit facility, which makes up half of the firm's current liquidity. The credit line, which runs until late 2009, is currently unused, he said.
"Our need is less than 500 million," Parvi said, citing the company's smaller size and healthier balance sheet but not giving exact estimates.
M-real Chief Executive Mikko Helander said he was confident the company would exceed its target of 200 million euros in cash proceeds from divestments in 2008.
"I am very confident we have a good chance to exceed that," he said, adding the company has so far divested operations for 162 million euros.
"All our current paper businesses are still under evaluation," Helander said. "We still have assets, operations which are not core and not needed in the future."
He said paper prices on average were still around 20 percent below where they were five to six years ago, and consolidation was essential to help the sector regain pricing power.
"Consolidation is needed and we are working hard to support that process," Helander said.
"I believe strongly that whatever is done, M-real can play an active role," he said. "We have the readiness to be an active player."
(Additional reporting by Julie Breton; editing by Sue Thomas)
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