After years of struggling with debt and almost five months in bankruptcy, paper maker Norske Skog has been sold to a private equity company for 235 million Euros ($373 million).

London-based purchaser Oceanwood Opportunities Master Fund has been declared the successful bidder of more than 100 which took part in the four-month competitive auction which followed its bankruptcy in December.

The Norwegian-headquartered company operates seven "profitable" paper mills around the world including two in Australia and one in New Zealand, with capacity of 2.7 million tonnes (1.8 million tonnes of newsprint and 900,000 tonnes of SC and LWC magazine paper.

Australian prime minister Malcolm Turnbull visited Norske Skog's Boyer, Tasmania, mill in February with a promise that the federal government would invest $1.5 million into a $3 million feasibility study for a biochemical project at the mill.

The Boyer mill - which has been producing newsprint since 1941 - employs 270 staff, while another 185 work at Albury, NSW, and 160 at the Tasman mill in New Zealand. Between them, they produce 714,000 tonnes of paper a year.

Norske Skog sold its two Korean mills to PE firms Morgan Stanley Asia and Shinhan in 2008, two years after selling its Canadian mill interests.

Oceanwood has been an investor in Norske Skog in 2015, and investment adviser John Chiang says it decided to act in November last year to protect the operating companies when it became apparent that a consensual solution to solve financial issues in the former Norske Skogindustrier holding structure was unlikely.

"With the subsequent auction process now concluded, we are very excited to team up with Norske Skog's management and employees," he says. "We share the ambition to see the new Norske Skog Group succeed and to realise the potential that we believe is inherent in the business as it continues to transform and grow."

Norske Skog chairman Sven Ombudstvedt describes the sale as "one of the most important milestones" for the group in recent years. "It concludes almost two years of relentless efforts and engagement to address the Norske Skog Group's excessively levered capital structure."

He says Oceanwood's decision to acquire a majority position in the secured bond and the decision to initiate a sales process proved to be the key to resolving the stalemate.

President and chief executive Lars Sperre says the group and its employees "now have a unique opportunity to further develop a sustainable business platform".

The transaction is subject to regulatory approvals in the countries concerned -including Australia and New Zealand - expected in the second half of 2018.

Pictured: The Boyer mill, where an $85 million upgrade to produce LWC paper was completed in 2014