Avilon Ltd, part of Neo Industrial's Viscose Fibers business has today submitted an application in its local district court for a corporate restructuring. Behind the arrangement is Avilon's currently critical liquidity situation. The restructuring's objective is to secure the company's promising long-term development by ensuring its short-term operating conditions.

Despite facing short term market induced difficulties, Avilon's long-term prospects are promising. Avilon's market situation has changed almost monthly. However, Avilon still has confidence in its long-term outlook. Corporate restructuring is a necessary protective measure against any single creditor's actions endangering the continuation of Avilon's mid-term operations and production.

Avilon's tight liquidity situation is due to the overheating of the viscose fiber market that started last spring and led to an unprecedented, short-term weakening of the fiber market and price. Avilon's Valkeakoski-based factory has been in a temporary shutdown since the end of July, and sales of the existing stock have been less than Avilon hoped.

The United States, main market of Avilon's strategically important product, fire-retardant fiber, suffers from a stagnated construction market. Hence, Avilon's customers' stock levels are currently high. The basic viscose fiber market is, however, already recovering.

- We are now working towards the moment when profitable production can be restarted and we can utilize our achievements thus far: successful startup of the factory, our innovation enabling the use of paper pulp, attaining a good market position on the US fire-retardant fiber market, as well as new product innovations now very close to commercializing, comments Avilon's Managing Director Heikki Hassi.

Avilon's recently launched technology business related negotiations have proceeded well. Possible license sales will have a significant immediate as well as a long-term effect on Avilon's financial situation.