Businessman Denis O’Brien has emerged as a major shareholder in a New Zealand paper mill that was acquired five years ago by a group led by packaging entrepreneurs Dermot and Michael Smurfit.
Dermot Smurfit confirmed to The Irish Times that O’Brien acquired a 24.3 per cent stake in late 2024 amid a refinancing of the loss-making business. He declined to say how much the telecoms veteran paid for the stake.
“The paper business has been going through a very tough time since the end of Covid,” said Smurfit. “We’re waiting for the global industry to come out of recession.”
O’Brien’s investment – through a vehicle called Jurway DAC – in Power Paperboard, the parent company of the Whakatane mill in New Zealand’s North Island, was first reported this week by the New Zealand Herald. A spokesman for the businessman did not respond to a request for comment.
READ MORE
The report noted that it occurred in September 2024, a year when the mill spent NZ$128 million (€64.8 million) upgrading equipment and technology to increase production capacity from 150,000 to 200,000 tonnes of finished goods packaging.
Dermot Smurfit (75) led the takeover of the Whakatane mill in May 2021, saving the plant from closure after its previous owner and biggest customer, Swiss packaging company SIG Combibloc, concluded that the plant, which made liquid packaging board used for milk and juice cartons, had become uncompetitive in this market.
[ Smurfit brothers lead takeover of New Zealand paper millOpens in new window ]
Smurfit saw an opportunity to ramp up production in the mill’s two other lines of business: folding box board, a grade of packaging that is safe for direct contact with food, and carrier board, typically used for beer packaging.
The buying consortium also included Ross George, a founder of Auckland-based private equity firm Direct Capital and Swiss-based investor Raymond Alan Dargan, among others. The deal amounted to a payment of NZ$1 in cash and the buyers initially providing NZ$5.96 million in working capital. The business reportedly had almost NZ$120 million of net assets at the time of the purchase.
The latest financial statements for the company show that its revenues rose by 38 per cent to NZ$195.7 million in the 12 months to last June. However, it reported a net loss of NZ$27 million for the year, albeit down from a NZ$31.2 million shortfall posted in the previous financial period.
“The global paperboard industry has experienced challenging market conditions, which have continued into 2025,” the report said. “The group has maintained operations with the support of its lender [Bank of New Zealand] and shareholders.”
While the directors’ said they see the company posting an “improved performance” and ongoing compliance with its lending covenants, its forecasts “are subject to material uncertainties, particularly around sales growth and maintaining margins, given significant rising energy costs.”
Company shareholders have provided NZ$64.8 million in loans to support the business in the past two financial years, according to the report.
Dermot Smurfit, former deputy chairman of Smurfit Westrock precursor Jefferson Smurfit Group (JSG), and Michael Smurfit, JSG’s one-time chairman and chief executive, were first attracted to Whakatane mill by an opportunity to emulate their successful involvement in Powerflute, a once-distressed Finnish paper mill where they led a takeover in 2005.
That business ended up being acquired by US private equity group Madison Dearborn Partners for £268 million (€312 million) a decade ago, a deal that resulted in a £65.6 million (€75.2 million) pay-day for the Smurfits.
O’Brien’s investment in the mill came in the same year as he ceded 90 per cent ownership of his Digicel telecoms business to a group of the company’s bondholders in a debt-for-equity swap. The same year saw O’Brien sell his controlling stake in the Beacon Hospital in Dublin to Australian financial services giant Macquarie.
