24 Nov 2022 16:16

VSMPO-Avisma shareholder closes deal for purchase of Russian assets of Arconic

MOSCOW. Nov 24 (Interfax) - Industrial Investments LLC, the major shareholder of VSMPO-Avisma , has closed the deal on the purchase of the Russian business of Arconic .

Arconic Rus Investment Holdings, which controls Arconic SMZ (formerly Samara Metallurgical Plant), became a 100% subsidiary of Industrial Investments, according to the Unified State Register of Legal Entities.

The transaction, which received all the necessary regulatory approvals, was valued at $230 million, Arconic said.

The company recalled that the funds held in Russia were inaccessible due to legal proceedings initiated by Russia's Federal Antimonopoly Service. As a consequence of the sale of the company, which was subject to FAS restrictions, Arconic considers its participation in the lawsuit settled.

Restrictions on Arconic's Russian assets were imposed in 2020 - and since then it has only become more difficult to operate in Russia, and the prospects have become increasingly uncertain in light of the current geopolitical situation, Arconic head Tim Myers said.

Arconic announced its intention to sell its enterprise in Samara in May of this year. The company estimated its losses from the deal at up to $500 million.

"It's a commercially profitable deal, especially considering the production and business synergy between VSMPO-Avisma and SMZ," a spokesperson for Industrial Investments said.

Arconic SMZ reported Q2 revenues of $314 mln (+34% YoY) and adjusted EBITDA of $24 mln (Q2 2021 level). The sanctions-induced decrease in the company's exports is expected to have a negative impact on its financial results for the year, Arconic said earlier. At the end of the year, the company's adjusted EBITDA is expected to be $50 million to $80 million compared to $87 million for 2021.

Arconic was spun off in 2016 from aluminum giant Alcoa Corp. JSC Arconic SMZ, one of the largest producers of aluminum semi-finished products in Russia, has been a part of Arconic since 2005. The company produces a wide range of rolled, pressed and forged products.

Industrial investments, whose main owner is Mikhail Shelkov, the deputy chairman of the VSMPO-Avisma Board of Directors, controls 65.27% of VSMPO-AVISMA shares while Rostec State Corporation owns 25% plus 1 share.