Mondi has confirmed that it has entered into an agreement to sell its most significant facility in Russia, JSC Mondi Syktyvkar, together with two affiliated entities to Augment Investments Ltd for a consideration of RUB 95 bn (around €1.5 bn) , 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 UK.
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. The Disposal is also subject to the approval of Mondi’s shareholders at a General Meeting.
The Syktyvkar assets to be transferred to Augment as part of the proposed disposal exclude a cash balance of RUB 16 bn (around €255m). The cash balance is planned to be distributed by form of dividend to Mondi before completion. Remittance of this dividend requires the approval of the Ministry of Finance of the Russian Federation. The net proceeds from the Disposal and the RUB 16 billion dividend will be distributed to Mondi’s shareholders as soon as reasonably practicable following receipt.
The proposed Disposal follows Mondi’s announcement on 4 May 2022 that, having assessed all options for the group’s interests in Russia, it had decided to divest its Russian assets. Accordingly, Mondi launched a competitive auction process to find a suitable new owner for Syktyvkar.
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 revenues of €821m, EBITDA of €334m and profit before tax of €271m.
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. The Disposal is expected to complete in the second half of 2022. However, Mondi said the divestment process for these assets is operationally and structurally complex and is being undertaken in an evolving political and regulatory environment. Therefore, there can be no certainty as to when the proposed disposal will be completed.