Mondi, the global packaging and paper group, is selling its biggest asset in Russia, Syktyvkar, and two affiliated entities, for RUB 95 billion (about R23.32bn) to Augment, a company owned by Russian billionaire Viktor Kharitonin.
Mondi’s share price surged 4.1 percent to R316.91 on the JSE on Friday afternoon.
Mondi’s Russian businesses have contributed some 20 percent of their earnings before interest tax depreciation and amortisation (EBITDA) over the past three years, but the Ukraine conflict saw Mondi reconsider its 22-year operations in Russia.
Its share price also fell sharply after the crisis started.
Kharitonin made his fortune from pharmaceutical firm Pharmstandard, which he co-founded and which listed on the London Stock Exchange in 2008. He is, according to Wikipedia, one of the Russian billionaires that haven’t been sanctioned during the Russia and Ukraine conflict.
Mondi operates across 30 countries, generating revenue of €7.7bn and underlying EBITDA of €1.5bn in 2021.
Mondi said Friday that the disposal was conditional on the approval of Russia’s Sub-Commission for the Control of Foreign Investments and other approvals. Mondi’s shareholders also need to approve the deal at a general meeting.
The Syktyvkar assets to be transferred to Augment exclude cash of around €255m, which is planned to be distributed via dividends to Mondi.
The disposal proceeds and dividend would then be distributed to Mondi’s shareholders, the group said Friday.
Mondi decided in May that, after assessing the options for its interests in Russia, it would sell off the business. A “competitive auction process” was done to find a suitable new owner.
Syktyvkar is an integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar (Komi Republic). It employs some 4 500 people and is a leading provider of uncoated fine paper and container boards to the domestic Russian market.
Syktyvkar reported revenues of €821m for the year to December 31 and earnings before interest, tax, depreciation and amortisation (EBITDA) of €334m. For the six months to June 30, its EBITDA was €225m. Its net asset value was €1.2bn.
Mondi operates three converting plants in Russia, which are much smaller in size, not affiliated with Syktyvkar and not part of the disposal.
These plants were also being sold, and Mondi intended to update shareholders in due course.
Augment holds assets in the pharmaceutical and other sectors across Russia, Europe and the UK. The disposal was hoped to complete in the second half of 2022.
As of June 30, Mondi had €1 billion of expansion projects underway, approved or under advanced evaluation to grow in its packaging markets, build on its market positions and add to its track record of “disciplined capital allocation.”
BUSINESS REPORT