Paper and packaging group Smurfit Kappa yesterday confirmed it is preparing for a possible return to the market this year, a move that was welcomed by analysts and traders.

In a statement, Smurfit said it noted recent speculation in the media concerning a possible initial public offering (IPO) and as a result confirmed it was seeking approval from its lenders to amend certain terms of its senior credit facility to facilitate an IPO during 2007. The group, which was formed a year ago through the merger of Jefferson Smurfit and Dutch firm Kappa Packaging, has almost €5 billion of debt.

Smurfit yesterday declined to give any further details about the possible return to market - Jefferson Smurfit was taken private four years ago - and analysts said it was too early to put a value on the IPO, as this would depend on how much of the company was listed, whether any more capital was raised and what stake the current owners, private equity groups Cinven Ltd, CVC Capital Partners and Madison Dearborn, hold on to.

The enterprise value of the company as it currently stands is believed to be about €6 billion, which when the €5 billion of debt is stripped out, implies a value of about €1 billion for the group pre-flotation.

Dublin traders welcomed the possible comeback of such a well-known Irish name, saying it represented a good opportunity for investors and for the market itself.

"We will take any new listings we can get," said one, adding that a company the size of Smurfit was particularly welcome.

While interest is expected to be high among Irish investors, it is believed this might increase if chairman Michael Smurfit were to retire as expected.

Debt ratings agency Standard & Poor's also welcomed the news, saying a successful IPO could improve the group's financial profile should the proceeds be used for debt repayments.