Paper maker Norske Skog says new credit arrangements and the sale of its former Union mill will give it financial headroom for the New Year.

the company says it has reached an agreement with its bank syndicate resetting covenants related to the 140 million Euro revolving credit facility established in May this year, but has ended discussions about securitising European receivables without reaching an agreement.

An agreement with local real estate developers Bratsberg Gruppen and Conceptor will lead to completion of the sale of Klosterøya, site of the former Union mill in Norway. Pending on buyer financing this will bring cash proceeds amounting to NOK 100 mill. (A$16.4 million) in February 2012.

“With this agreement around NOK 250 mill. of non-core disposals in second half of 2011 have been settled as guided,” says a spokesman.

Previously announced sale of Norske Skog Parenco is continuing, with the company evaluating alternative uses for the site. Production of publication paper there will stop in 2013 “at the latest”.