MEPCO signs SAR 123 mln tissue rolls manufacturing deal

MEPCO logo

Middle East Paper Co. (MEPCO) signed an agreement worth SAR 123 million with TOSCOTEC to purchase tissue paper jumbo rolls production line, it said in a bourse statement.

MEPCO further stated that an advance payment will be made within 21 working days from the date of signing the contract in exchange of a bank guarantee from the supplier, and the rest in instalments that correspond to the delivery, installation, operation and final receipt with the company obtaining a performance guarantee according to the terms of the contract.

The deal will be funded through loans from banks and the Industrial Development Fund.

The financial impact of the transaction will be reflected on the plant and equipment as well as the obligations in the value of contract payments and in conjunction with their payment.

The financial impact of the transaction will reflect on the financial statements from the first quarter of 2021.

TOSCOTEC is an Italian company, specializing in designing and manufacturing turnkey projects and complete machines, and reconstruction of individual factories and equipment for the manufacture of tissue, paper and cardboard. It provides the latest technology and customized solutions to major paper producers around the world. The technology aims to achieve maximum production efficiency, reduce consumption, operating costs and end products of the highest quality, and respect for the environment.

MEPCO’s tissue machine will have a production capacity of over 60,000 tons per annum of tissue jumbo rolls, covering a wide range of basis weights.

The machine is characterized by a developed design to ensure correct production volumes while achieving the highest rates of operating efficiency and energy savings. The manufacture of the machinery will take place in Lucca, Italy starting from the first quarter of 2021, and is expected to complete within 12 months.

“This is the first milestone in our new tissue project. We are progressing according to the planned timeline,” Sami Safran, CEO of MEPCO, said.

According to data compiled by Argaam, MEPCO’s board of directors approved, on Dec. 7, 2020, the establishment of tissue paper and hygienic paper jumbo rolls production plant at an estimated cost of SAR 338 million. The project, which is expected to have an annual production capacity of 60,000 tons, will be established on the company's land in the Industrial Valley in King Abdullah Economic City (KAEC).