22 Mar 2024 10:55

Segezha mulls recapitalization in 2024, in talks with investors - Shamolin

MOSCOW. March 22 (Interfax) - Segezha Group , a Russian forestry company controlled by investment group Sistema PJSFC , plans to recapitalize this year to reduce its debt burden, as its net debt/EBITDA ratio topped 13 in 2023, Segezha president Mikhail Shamolin said in an interview with Interfax.

"We're considering a whole range of possible scenarios. The problem, obviously, has several possible optimal solutions. We're weighing the pros and cons of each option. We're also considering recapitalization, in one form or another. We are now in negotiations, there are a number of partners with initiative who are interested in buying into Segezha Group, acquiring a stake and investing money in the company. I won't name them now, or the figures, but the concept is clear," Shamolin said.

"I believe that we need to complete all actions to resolve the issue of the debt before the end of this year. We will certainly solve this problem with the debt and it will no longer be so significant for us," he said when asked when the company will raise the anticipated funds.

He said investors' interest in Segezha is understandable. "Right now Segezha Group is priced at 4 rubles per share, but with OIBDA of 40 billion rubles it will be worth 12 rubles per share. Therefore, whoever invests money now can potentially triple it on Segezha Group, which is even more lucrative than a rate of 20%," Shamolin said, adding that an EBITDA target of 40 billion rubles is quite achievable if lumber prices in China increase and already planned investment projects are carried out.

He did not comment on the possibility of Sistema reducing its equity stake in the company, redirecting the question to the controlling shareholder. However, he said recapitalization is not tied to the possibility of technically getting Segezha out from under the direct sanctions that the United States imposed against Sistema and its controlled subsidiaries.

"We're not considering any measures to get out from under sanctions. Any actions that we take will be dictated only by business interests. We're working only with those partners who do not participate in sanction restrictions against Russia, and in this sense we're operating like a normal business," Shamolin said.

Segezha presented its IFRS results for 2023 on Friday, reporting that its net debt stood at 122.6 billion rubles at the end of the year. EBITDA totalled 9.3 billion rubles for the year, so the net debt/EBITDA ratio topped 13. The company's total debt amounted to 133.2 billion rubles on December 31, 2023, 6% more than a quarter earlier.

Segezha Group is a vertically integrated international forestry company that combines the logging and wood processing assets of Sistema, which owns 62.2% of the company. Segezha raised 30 billion rubles with an IPO in April 2021. Its free float is 24.25% and members of the board of directors and management board hold 4% of shares. The company's charter capital is split into 15.69 billion common shares with par value of 0.10 rubles each.