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The paper merchant and manufacturer said on Monday that Nippon had agreed to pay A$600 million in cash and a range of other considerations, including assumed liabilities and an earn-out arrangement.
The earn-out will allow PaperlinX to reap some earnings growth from the divested operations over the next three years.
The company said it would book a writedown of around A$600 million from the sale of the unit, which is the manufacturing arm of PaperlinX.
It also said it had postponed its first half 2009 results until February 27 "to allow the accounts to be adjusted for changes related to the transaction".
The company reported the transaction after the market closed on Monday.
"The final level of writedown is subject to review, and has the potential to vary from the level indicated," PaperlinX said.
While the Australian Paper sale will exclude the company's two Tasmanian paper mills at Burnie and Wesley Vale, PaperlinX has not ruled out a sale or partial sale of the two mills and will conduct a review of each.
PaperlinX chairman David Meiklejohn said the Australian Paper divestment was a major step forward in the company's transformation and would strengthen its financial profile.
The company has been in talks with several parties over a possible sale for months after PaperlinX suffered weaker paper demand, and conducted a review of the paper unit.
PaperlinX will use the cash proceeds from the sale to pay down A$150 million in debt in PaperlinX's multi-currency debt facility due by May 2009.
The company posted a 9.9 per cent slump in fiscal 2008 net profit to A$72.2 million and a 4.2 per cent fall in revenue to A$7.49 billion.
(AAP)
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