#Finland #Espoo #Kronospan Energy #Valmet Technologies #Arbitration Claim

Kronospan Energy Initiates Arbitration Against Valmet Technologies

In a significant development in the energy sector, Kronospan Energy S.A. has filed for arbitration against Valmet Technologies Oy, a subsidiary of Valmet. This request for arbitration centers on a Purchase Agreement dated January 18, 2022, concerning the delivery of a biomass-fired heat and power plant (referred to as “CHP3”). This project has a projected value of around EUR 100 million.

Background of the Dispute

The agreement outlined the delivery and specifications of the CHP3 plant, which was officially taken over on July 12, 2024. The primary issues at the heart of the arbitration stem from alleged performance deficiencies and defects associated with the CHP3 plant. Specifically, Kronospan Energy has filed claims that assert Valmet did not meet the performance parameters as stipulated in the Purchase Agreement.

Responding to these allegations, Valmet Technologies Oy has robustly contested Kronospan’s claims, emphasizing that the CHP3 had indeed met all necessary performance criteria when it operated under the agreed conditions and utilized the specified fuel types.

Financial Implications

Kronospan Energy has outlined its preliminary monetary claims, which total approximately EUR 130 million. These claims are largely focused on two areas:
1. Damages resulting from a perceived loss in value of the CHP3 plant, quantified at around EUR 102 million.
2. Lost profits amounting to approximately EUR 23 million, specifically related to the Sanem site in Luxembourg where the CHP3 is installed.

Valmet Technologies Oy is preparing not only to defend itself against the claims made by Kronospan Energy but is also prepared to pursue its own claims against the company. This counter-strategy indicates Valmet’s confidence in the strength of its position as they navigate through this arbitration process.

Assurance from Valmet Management

According to Valmet's management, they do not foresee any substantial negative impact on their operations or financial standing as a result of this ongoing arbitration, based on the information available at this time. Marc Oksala, the General Counsel of Valmet, conveys a sense of assurance about the company’s readiness to engage deeply while addressing these claims.

Valmet’s Confidence in the Energy Market

Valmet has established a solid foundation in the energy solutions industry, boasting a wealth of experience in successfully delivering energy systems to clients around the globe. With over 225 years of industrial expertise, Valmet prides itself on its innovative technologies and comprehensive service offerings, believing that their extensive knowledge will play a significant role as they address the arbitration brought against them by Kronospan Energy.

Next Steps

The arbitration process is expected to be drawn out, with Kronospan maintaining the right to modify its claims and potentially raise additional allegations as the cases progress. Both parties are likely to engage in detailed discussions and investigations to support their respective positions. Valmet has committed itself to uphold transparency in its dealings and continue engaging with stakeholders throughout this arbitration process.

As a global leader in process technologies, Valmet remains focused on delivering high-quality solutions tailored to meet specific client needs, all while strategizing effectively to navigate legal challenges and remain a key player in the energy sector. With firm management and skilled professionals at the helm, Valmet is prepared to address the arbitration head-on, confident in its commitment to quality and innovation.

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For further inquiries, you may contact:

• - Rasmus Oksala, General Counsel, Valmet - +358 50 3173 830
• - Pekka Rouhiainen, VP, Investor Relations - +358 10 672 0020

With Valmet's significant global footprint and a dedicated team of approximately 18,500 professionals, they are well-positioned to transform industries and contribute towards a regenerative tomorrow.