. The closure of the Salo plant, partnership talks in Asia and a delay in the start-up of the India plant where all announced on June 15, 2007 at 4:40 pm by Aspocomp in the following press release.
The statutory labor co determination negotiations that were launched in May concerning the personnel at Aspocomp Oy and Aspocomp Group Oyj were concluded today. As a result, it was decided that a total of 237 personnel, consisting of 183 non-salaried and 54 salaried employees, will be made redundant. Production at the Group's Salo plant will be closed down and employment of 215 personnel terminated. The aim is to shut down production by mid-July and implement the planned personnel reductions in 2007. Aspocomp intends to use part of the plant's production equipment in its facilities in China and India.
The negotiations concerned about 350 employees in Finland, excluding the personnel of the Oulu plant. After the personnel reductions, headcount in Finland will total 219 employees. Of those, 161 personnel work at the Oulu plant. Part of the Group's research and development will remain in Finland to serve the company's global customers. In addition, the Group will start product development in the premises of its Chinese plant this year.
The goal of the layoffs and the shutting down of the Salo plant is to reach annual savings in excess of EUR 10 million. Balance sheet write-offs and non-recurring costs resulting from the layoffs are estimated to total about EUR 20 million. Of this, write-off of the plant building accounts for about EUR 11 million. The shutting down of the plant is anticipated to decrease the Group's net sales for 2007 by about EUR 10 million and reduce loss before non-recurring items by about EUR 3 million.
The full-year 2007 result is expected to be markedly unprofitable. Aspocomp Group Oyj's liquidity is estimated to remain weak due to the negative result and a reduction in certain credit limits that the company previously had available. A larger than planned part of the net proceeds obtained from the rights offering is used for the company's working capital requirements. After closing down the Salo plant and excluding the effect of the plant project in India, the Group's profit from the continuing operations is expected to improve to the break-even level.
Negotiations on partnership in Asia, delay in the plant project in India Aspocomp has previously announced that it will be active in the industry's consolidation trend. The Group is presently negotiating on potential cooperation with strategic partners in order to accelerate its growth in Asia and to finance its planned investment program.
The possible choice for strategic partnership will affect the timing for the start-up of the plant in India. The Group will also continue negotiations with alternative financiers to the plant project. The duration of the partnership and financing negotiations cannot be estimated and the company cannot guarantee their outcome.