Schweighofer sells its Romanian forests to Swedish GreenGold

Schweighofer sells its Romanian forests to Swedish GreenGold
By bne IntelliNews March 27, 2018

Austrian wood processing company Holzindustrie Schweighofer announced on March 26 that it has sold its 14,200ha of forest held in Romania through wholly-owned subsidiary Cascade Empire to Swedish GreenGold Group.

Schweighofer lost its FSC certificate for good practices in wood sourcing last year for illegally sourcing wood from Romania, after which most Romanian DIY chains refused to sell Schweighofer wood products. The company is currently striving to get FSC associate status again.

Back in 2015, the Romanian NGO Agent Green published a video that appeared to show a shipment of undocumented wood from a Romanian national park being delivered to Schweighofer, sparking a national scandal. In October 2015, the global NGO the Environmental Investigation Agency (EIA) published a report claiming that the company had processed “large amounts of illegally harvested timber” from Romanian forests. According to the EIA, over 50% of logging in Romania is illegal.

The same year, Romania’s ministry of environment spotted irregularities, including the purchase of illegally harvested wood, after investigations at Schweighofer. 

The FSC eventually decided on February 17 to revoke Schweighofer Group’s probation status and disassociate from the group. The decision came after additional information about the possible violation of timber measurement standards, which will require further investigation. Maintaining the probation status during the prolonged investigations would result in the continuation of the trade of possibly non FSC-compliant products, FSC’s board of directors explained.

The FSC said it recognised Schweighofer’s efforts during the past months to develop a preliminary plan of corrective action and encourages it to use this work to continue discussions and to develop a roadmap to end the disassociation.

The buyer of Schweighofer’s Romanian forests, GreenGold Asset Management AB/KB, is owned by GreenGold private equity fund, founded in Sweden by Romanian citizen Sorin Chiorescu, Ziarul Financiar daily disclosed. Notably, GreenGold sold 33,600 ha of forest in Romania to Swedish furniture group Ikea in 2015. 

The daily estimates the Cascade Empire deal at €90mn, which is a rather high price compared to previous deals reported by media. Cascade Empire purchased 8,000 hectares of forest for €20mn, Ziarul Financiar reported in 2009. German investment group Nordcapital reportedly paid €30mn for more than 10,000ha of forest, according to unofficial data quoted by Ziarul Financiar in 2010. The price of the 33,600ha sold in 2015 by GreenGold to Ikea was estimated at between €70mn and €150mn based on the prices prevailing at that time.