Mondi to sell Syktyvkar mill to developer Sezar Group for 80 bln rubles

MOSCOW. Sept 18 (Interfax) - Mondi plc has entered into an agreement to sell its largest and last asset in Russia, JSC Mondi Syktyvkar, for 80 billion rubles, or about 775 million euros at the current rate, to Sezar Invest LLC, the packaging and paper multinational announced in a press release on Sunday.

Sezar Invest is a subsidiary of Moscow real estate developer Sezar Group, the principal beneficiary of which, according to the Unified State Register of Legal Entities, is entrepreneur Isai Zakharyaev.

Russia's Federal Antimonopoly Service and government subcommittee for control over foreign investment have approved the sale, Mondi said.

Under the terms of the deal, the money for the Syktyvkar pulp-and-paper mill will be paid to Mondi in six monthly instalments, the company said. The first four payments will be 13.5 billion rubles each, with the first payment to be made by the end of September 2023.

"Once the first four monthly instalments have been paid to Mondi, expected to be by the end of December 2023, the Disposal will complete and ownership of Mondi Syktyvkar will transfer to Sezar Invest and, accordingly, Mondi will have completed its exit from Russia," the group said.

The final 26 billion rubles will be paid in two equal instalments in the two months after completion. These payments will be secured by a letter of credit issued to Mondi prior to completion, the group said.

Mondi earlier attempted to sell Mondi Syktyvkar to Augment Investments Limited, a company close to Viktor Kharitonin's Pharmstandard . Mondi announced in August 2022 that it had signed an agreement with Augment to sell the mill, which produces Snegurochka office paper, among other things, for 95 billion rubles, which was about 1.5 billion euros at the time.

But the agreement expired in May 2023 as the companies could not secure permission for the deal from the government commission for control over foreign investment. As a result, Mondi announced in early June that it had terminated the deal and intended to find new buyers.

Mondi completed the sale of its Russian packaging business to Gotek Group on June 30, 2023 and said it received 30.4 million euros in proceeds from the deal in its Austrian bank account. This business consisted of three mills: Mondi Pereslavl LLC, a producer of food and non-food packaging in Yaroslavl Region; Mondi Aramil LLC in Sverdlovsk Region, Russia's only plant with full-cycle production of flexible polymer food, non-food and industrial packaging; and Mondi Lebedyan LLC, a corrugated cardboard packaging producer in Lipetsk Region.

Mondi Syktyvkar is one of Russia's largest producers of pulp and paper products, with annual output of about 1.2 million tonnes. The mill produces office and offset paper, newsprint, packaging cardboard and dry commercial pulp. Mondi Syktyvkar closed 2022 with net profit up 18% to 22.5 billion rubles on revenue up 9% to 78 billion rubles.

In the first half of 2023, Mondi's Russian business generated 535 million euros in revenue for the group, up 3.3% from a year earlier. But it posted an after-tax loss of 4 million euros, compared to a profit of 148 million euros in the first half of 2022. The result includes an impairment charge of 97 million euros on Mondi Syktyvkar, a disposal of business loss of 46 million euros and a foreign exchange loss of 28 million euros.