Saudi Paper inks deal worth SAR 166 mln for tissue paper rolls production line

Logo of Saudi Paper Manufacturing Co.

Saudi Paper Manufacturing Co. signed, on Oct. 1, an agreement with Italy’s Toscotec for the manufacturing and supply of a tissue paper rolls production line, at a total cost of SAR 166 million, according to a statement to Tadawul.

The deal is part of investments in the fifth production line, previously announced, with an approximate value of SAR 300 million. 

The company added that an advance payment will be made within two months maximum from the signing date, and the remaining will be paid in installments, corresponding to delivery, installation, receipt and final operations. The installments will extend to 16 months from the signing date, and the company obtains a performance bond from the supplier according to the terms of the contract. 

The transaction aims to increase the company's production capacity of tissue paper rolls by 60,000 tons per annum (tpa) from 130,000 tpa to 190,000 tpa, to meet the requirements of the local market and increase exports. 

The deal will be mainly financed from the company's operating revenues and sale of some non-operating assets, in addition to the proceeds of legal claims, for which judgments were issued in favor of the company. It will also be partially financed through banks and local financing agencies. 

The relevant financial impact will be reflected on the plant and equipment as well as the obligations in the value of installments and in conjunction with their payment. It will appear as of the fourth quarter of 2022. 

The deal included no related parties, the company said.  

Toscotec provides the latest technologies and solutions for major tissue paper producers around the world. This environment-friendly technology aims to achieve maximum production efficiency, reduce consumption, operating costs and final products with the highest quality. Production is expected to start during the third quarter of 2024. 

In June, the Tadawul-listed paper manufacturer signed an agreement of understanding with TOSCOTEC to purchase the fifth production line in the Dammam 2nd Industrial City, to produce tissue paper rolls with a production capacity of 60,000 tons annually at the total cost of SAR 300 million, according to data available with Argaam.