Arconic sells Russian assets to VSMPO-Avisma majority shareholder for $230 mln
MOSCOW. Nov 16 (Interfax) - Arconic Inc. has sold its Russian business to Industrial Investments LLC, the majority shareholder of titanium producer PJSC VSMPO-Avisma , for $230 million, the U.S. aluminum producer said in a statement.
Arconic owned the JSC Arconic SMZ plant, formerly Samara Metallurgical Plant, located in Samara, Russia.
"The transaction closed after Arconic received all required approvals, resulting in the receipt of $230 million of cash consideration for all of the Company's Russian assets. Cash held in Russia was not available for distribution to the parent company because of litigation initiated in March 2020 by the Federal Antimonopoly Service of the Russian Federation. Arconic sold the entities that were subject to the FAS restrictions and therefore considers its involvement in the FAS lawsuit to be resolved as a result of the divestiture," the company said.
"The assets of our Russian business have been restricted since prior to our emergence as a standalone company in April 2020. Operating in Russia only became more difficult and our ability to operate going forward became increasingly uncertain in light of the current geopolitical environment. This transaction supports our investments in future returns to our shareholders. I want to thank the remarkable team at our Russian operations that kept the facility running well through these most difficult circumstances," said Tim Myers, Chief Executive Officer.
Arconic announced in May that it intended to sell its Russian plant and that it expected to take a charge of up to $500 million as a result.
The Industrial Investments press service confirmed the purchase of the company. "We have indeed acquired the company Arconic SMZ. This is a commercially viable deal, especially considering the production and business synergy between VSMPO-Avisma and SMZ," the company told Interfax.
Arconic SMZ said earlier that its revenue grew 34% year-on-year to $314 million in the second quarter, while adjusted EBITDA was flat at $24 million.
However, the reduction of the plant's exports due to sanctions is expected to have a negative impact on its financial results for the year. The plant is expected to close 2022 with adjusted EBITDA down to $50 million-$80 million from $87 million in 2021, Arconic said.
Arconic was spun off from aluminum giant Alcoa Corp. in 2016. Arconic SMZ, which has been part of the U.S. company since 2005, produces a broad range of rolled, pressed and forged aluminum products.
Industrial Investments, majority owned by deputy chairman of the VSMPO-Avisma board of directors Mikhail Shelkov, controls 65.27% of shares in VSMPO-Avisma, while Rostec state corporation holds a blocking stake of 25% plus 1 share.