Mondi plc has entered into an agreement to sell its most significant facility in Russia, Mondi Syktyvkar, to Augment Investments Limited for a consideration of RUB95bn (around €1.5bn), payable in cash on completion.
Augment is an investment vehicle majority owned by Viktor Kharitonin, comprising assets in the pharmaceutical and other sectors across Russia, Europe and the United Kingdom.
The disposal is conditional on the approval of the Russian Federation’s Government Sub-Commission for the Control of Foreign Investments and customary antitrust approvals and on the approval of Mondi’s shareholders at a General Meeting, the company said. The date of the General Meeting will be confirmed following receipt of approval from the Russian authorities. Completion of the transaction is expected in the second half of 2022, but uncertainty about the date of the completion is great, Mondi stressed.
The proposed disposal follows Mondi’s announcement on 4 May 2022 to divest its Russian assets. Accordingly, Mondi launched a competitive auction process to find a suitable new owner for Syktyvkar.
The Syktyvkar assets to be transferred to Augment as part of the proposed transaction exclude a cash balance of RUB16bn (around €255m). The cash balance is planned to be distributed by form of dividend to Mondi before completion.
The net proceeds from the disposal and the RUB16bn dividend will be distributed to Mondi’s shareholders as soon as reasonably practicable following receipt.
Syktyvkar is a wholly owned integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar (Komi Republic). The business employs approximately 4,500 people and it is a leading provider of uncoated fine paper and containerboard to the domestic Russian market. For the year ended 31 December 2021, Syktyvkar reported sales of €821m, EBITDA of €334m and profit before tax of €271m. For the six months ended 30 June 2022, Syktyvkar reported EBITDA of €225m and as of 30 June 2022, the gross assets of the business were €1,590m while its net asset value was €1,203m.
According to information given earlier, the Syktyvkar mill can produce 1.2 million t of market pulp and paper, including 300,000 t of kraftliner, 200,000 t of woodfree uncoated paper and 180,000 t of newsprint.
Mondi operates three converting plants in Russia, which are much smaller in size, not affiliated with Syktyvkar and not part of the disposal. An update will be provided on the divestment of these plants in due course, Mondi announced.