Portals has been making banknote and security paper for more than 300 years. 

The shock news arrived alongside a simultaneous announcement from its largest customer, De La Rue, that said it was terminating its Relationship Agreement with Portals. 

The ten-year deal was agreed in February 2018 when De La Rue sold its paper wing to private equity firm Epiris and management in a £68m deal. De La Rue retained a 10% stake. 

Portals said that despite substantial recent investment, the Overton business had become unviable. 

Less than two years ago the mill completed a £20m revamp that included a rebuild of its PM1 machine.

Its other UK paper mill at Bathford in Somerset, which makes security papers including those used in passports, is not affected. 

In a statement Portals said: “Following the global pandemic and other recent world events we have seen a significant adverse impact on our banknote paper business.

“It is also clear that the change in the strategy of our largest customer, De La Rue plc, and the rising input costs specifically of energy, all in the context of the highly price competitive banknote paper marketplace in which we operate, means that our banknote paper business at Overton is no longer viable.”

Portals said a range of strategic options had been considered, to no avail. 

“Portals has a strong, proud heritage and it is our intention to wind down the Overton operations in an orderly fashion with as little disruption as possible – guaranteeing that all obligations to our customers, employees, suppliers and creditors are met.”

Portals thanked employees for their “ongoing dedication and hard work”.

“The coming months will be challenging in many respects and we will continue to do our utmost to maximise the prospects of all of our stakeholders.”

In its announcement, De La Rue said that it would pay Portals a £16.7m “exceptional settlement payment”, which would free De La Rue from the £119m fixed payment, profit contribution and volume shortfall payment obligations due for the remaining life of the Relationship Agreement between the two parties.

The Overton mill in Hampshire employs just over 300 people and has the capacity to produce circa-14,000 tonnes of banknote paper a year. 

It is located on a 30 acre site, which is owned by Portals. 

There will now be a 45-day consultation period with employees. 

The announcement was made late afternoon today (26 July). Unite national officer Louisa Bull told Printweek she would be on-site on 27 July to discuss the situation. 

“The news is devastating but we will meet our reps and Unite members and listen to what the company has to say. 

“We have a strong relationship with the mill and will give whatever support we can to our members as we work through this announcement.”

In March the Confederation of Paper Industries (CPI) warned that UK paper industry jobs and supply chains were at risk due to the energy price crisis. 

Responding to the Portals news, director general Andrew Large told Printweek: “This is a difficult day for the UK paper industry and my thoughts are with the employees of the Overton site and their families.

“This announcement is a sad example of the real world impact of uncompetitively priced UK energy supplies. It underscores the urgent need for credible UK policies that support paper industry decarbonisation while keeping energy prices internationally competitive.”

De La Rue also said that it had alternative sources of supply for its immediate banknote paper needs, and would conduct a formal tender process for its future requirements over the coming months.

Regarding the Bathford site, Portals chief commercial officer Laura Wheeler commented: “The rising cost of energy is a global issue and is impacting our Bathford paper mill and we are working with our customers to manage the situation. 

“Our customer dynamic is very different in Bathford (vs Overton) with a greater proportion of commercial B2B customers who understand the current economic situation.”

In its most recent results, to 27 March 2021, Portals had sales of £121.8m and made an operating profit prior to exceptionals of £3.3m. Passport paper was hit by "dramatically lower passport issuance" due to the pandemic, while volumes of paper for De La Rue were also significantly lower. 

Portals founder Henry Portal set up a paper mill at Bere Mill, on the River Test between Overton and Whitchurch, in 1712.