LSR Group selling Leningrad region cement plant to Eurocement
ST. PETERSBURG. Dec 12 (Interfax) - LSR Group is selling its cement plant in Slantsy, Leningrad region to Eurocement Group, LSR said in a press release.
The parties have signed preliminary sales agreement as Eurocement Group obtained approval from Federal Antimonopoly Service of the Russian Federation (FAS). The control over the plant operations is expected to be transferred in December 2014
LSR did not disclose financial details.
LSR-Cement began production operations in November 2011. It has capacity to produce 5,000 tonnes of cement clinker a day and 1.86 million tonnes of cement a year.
This deal is part of implementation of LSR Group strategy to focus on projects with highest returns on invested capital and fast growing real estate development business thus maximizing value for shareholders, LSR said.
LSR Group will use most of the proceeds to reduce its debt and make it 100% ruble based by the end of the year. Net Debt/EBITDA will be reduced to less than 1.0.
LSR currently uses only 40% of output from the plant. Meanwhile, there is now a glut of cement on the market. For those reasons, the company decided to sell the plant, LSR chief Alexander Vakhmistrov said.
Moreover, he said, Eurocement offered fair market value for the asset.
LSR invested about 445 million euro to build the plant, of which 344 million euro was borrowed from Vnesheconombank (VEB) and ABN Amro/HSBC. LSR financed the rest from internal sources.
Founded in 1993, LSR Group is divided into two divisions: development and building materials, and it also provides construction services. Its main owner is ex-senator Andrei Molchanov. The group manages companies that produce and process non-metallic minerals, produce and transport construction materials, and construct buildings, ranging from large mass housing to elite homes. LSR Group's main business is concentrated in St. Petersburg and the Leningrad Region, Moscow and the Moscow Region, Yekaterinburg and the Urals.
Eurocement Group is a major Russian construction materials manufacturer. It has cement plants in Russia, Ukraine and Uzbekistan, as well as facilities for producing concrete and concrete products, quarries for producing non-ore materials and commercial construction organizations.