The group-wide debt restructure includes the conversion of €125m of Arjowiggins' debt into bonds that will be converted into shares totaling 30% of Sequana's issued share capital on a diluted basis in December 2020, as well as the write-off of €164m of combined Arjowiggins and Sequana debt.

Sequana has also announced a €64m rights issue (€48m of which will be taken by major shareholders Bpifrance, Exor SA and the Allianz group), the entire net proceeds of which will go to Arjowiggins.

Arjowiggins operational restructure

The operational restructure is intended to significantly reduce Arjowiggins' exposure to the standard coated paper segment, while strengthening its position in the recylced paper and creative papers segments.

In the firm's Graphics division, this would result in the sale or closure of the Wizernes mill in France with production consolidated at Bessé-en-Braye and Le Bourray, as well as a definitive exit from the US market via the sale of the US Coated division.

In recycled paper, the group plans to set up a new deinked pulp unit at Bessé-en-Braye by mid-2016, while in the Creative Papers division Arjowiggins plans to concentrate "the bulk of its production" at the Stoneywood mill in Aberdeen.

However, Arjowiggins other UK Creative Papers mill at Chartham will see a reduction in the number of shifts, while its Charavines mill in France will be sold or closed; a fourth Creative Papers mill in Gelida, Spain will be gradually refocused on the bookbinding market.

Arjowiggins said it would shortly begin a search for a buyer for the Charavines mill, which is dedicated to the production of premium fine papers and security documents and has a total capacity of 20,000 tonnes/year.

The operational restructure was announced alongside the group's 2013 financial accounts, which included an 11.2% drop in sales at Arjowiggins, to €1bn (2012: €1.2bn) and an 11.1% drop in EBITDA to €56m (2012: €63m).

Sequana noted that while recycled pulp, laminated and transfer papers, and security solutions had "held up well", Arjowiggins had to contend with a sharp drop in volumes for European printing and writing papers and strong downward pricing pressure and a deterioration in product mix for fine papers.

Antalis' sales fell 6.2% to €2.5bn (2012: €2.7bn) while its EBITDA fell 16.1% to €70m (2012: €83m), although Sequana noted that gross margin had "held firm thanks to the increasing contribution of the Packaging and Visual Communications businesses".

Group debt restructure

Sequana also announced that it had signed an agreement in principle with its banks to restructure its own €26m credit facility, as well as the credit facilities for both Antalis and Arjowiggins, via a combination of measures including write-offs and debt-for-equity swaps.

Arjowiggins' €400m credit facility will restructured via: a €155m debt write-off; reinstatement of a €100m debt facility (maturing in 2020); the issuance of €20m of Disposal Proceeds Notes (DPN) redeemable in cash from the sale of certain assets; and the conversion of €125m of debt into non-interest bearing bonds that will be converted into shares totalling 30% of Sequana's share capital when they mature in December 2020.

Arjowiggins' overdraft facility will be reduced from €50m (undrawn at 31 December 2013) to €30m.

Antalis' debt restructure includes a €200m refinance through the setup of a factoring programme by the end of 2014 as well as the rescheduling of €320m debt, the maturity of which has been extended to December 2018.

Lastly, Sequana's €26m credit facility will be restructure via a €9m debt write-off, the reinstatement of a €10m debt facility and the conversion of €7m of debt into non-interest bearing bonds redeemable for 2.5% of Sequana's share capital in December 2018.

Sequana shares were trading down more than 22% at the time of writing at €5.56 (prev. close €7.21).