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. Last Updated: 07/27/2016

AssiDoman To Close Karelia Mill

STOCKHOLM, Sweden -- Swedish forestry group AssiDoman said Monday that production at its Segezhabumprom plant in the northwest Russian region of Karelia would be halted from Jan. 8.

AssiDoman said the decision to close the pulp and paper mill was made by management after talks with shareholders in an attempt to raise enough operating capital to be able to continue the business and production.

"During recent months our financial situation has deteriorated," Segezhabumprom's general director, Soren Oberg, said in a statement. "The company's bank accounts are still blocked. Our contract with the shareholders have not produced any new possibilities for Segezhabumprom to get necessary working capital. Therefore we have no other option than to stop production."

AssiDoman said the power station at Segezhabumprom will continue operating after the stoppage, with enough oil in stock to supply heating to the city of Segezha for about one month.

Necessary steps will be taken to protect equipment and machinery from damage during the stoppage.

The Segezhabumprom mill is 57 percent owned by AssiDoman through its wholly-owned unit Stratton Paper Co. The rest of the plant is Russian owned.

When First Deputy Prime Minister Boris Nemtsov visited Sweden with President Boris Yeltsin last month, AssiDoman was one of several Swedish companies that appealed to him directly, saying bureaucracy and excessive tax laws were stifling foreign investment in Russia.

AssiDoman had been forced to supply working capital every month to keep the plant open since it acquired its 57 percent stake for 350 million crowns in July last year.

But it warned last month that it could no longer finance the loss-making project on its own and turned to other shareholders who had not provided any capital to solve the financial crisis.

AssiDoman shares closed 10 crowns higher at 209 crowns after a half-day trade Monday.