AFK Sistema signs binding agreement to purchase Investlesprom assets
MOSCOW. April 4 (Interfax) - AFK Sistema has signed a binding agreement with the Bank of Moscow to purchase assets of Investlesprom, Sistema said in a statement.
"Sistema JSFC ("Sistema") , the largest publicly-traded diversified holding company in Russia and the CIS, today announces that its subsidiary LLC LesInvest has signed legally binding agreements with the Bank of Moscow to acquire 100% of OJSC Segezha Pulp and Paper Mill and 100% of LLC Derevoobrabotka-Proekt [DOP] together with all debt obligations to the Bank of Moscow on debt free cash free basis. The closing of this transaction is contingent upon the approvals of relevant anti-monopoly authorities. The transaction is expected to be completed by the end of the third quarter of 2014," the company said in a statement.
The deal will be a leveraged buyout. Up to half of the cost of the deal will be financed by loan funds obtained by the mill and DOP. Their debts to third parties as a result of the deal will equate to what cash remains on their accounts.
Sistema has not revealed the deal price tag or the size of Investlesprom asset debts.
"The companies we have acquired are leaders in their industries and offer exciting prospects. They generate stable cash flow and have substantial turnaround potential, which Sistema is well placed to realize. We intend to maximize shareholder value by restructuring the businesses, introducing a number of efficiency measures, modernizing production and expanding into new export markets," Sistema's President and CEO is quoted as saying.
Investlesprom obtained quite a bit of credit money from Bank of Moscow under its previous management. After the bank came under the control of VTB , Investlesprom's debts of around $1 billion were acknowledged to be problematic.
Sistema's main owner Vladimir Yevtushenkov told the press a while ago (the deal took more than a year to set up) that Investlesprom was a challenging asset. However, "good assets are few and far between, so any major asset is of interest, if it has an adequate management team, in order to add value to it and offer it to the market as something totally different."
LesInvest will become one of the biggest producers of paper sacks and sack paper in Russia, the second biggest sack producer in Europe, and on to the biggest producers and exporters of plywood and other timber products in Russia.
