Stockholm, 2010-07-01 18:00 CEST (GLOBE NEWSWIRE) --
To fund the future development and expansion of RusForest AB ("RusForest" or the "Company"), RusForest is currently evaluating the prerequisites for carrying out a rights issue during the coming 3 to 4 months. The capital raise is partly related to RusForest's intended merger with Nord Timber Group and the joint development plans.
The size of the intended issue - along with the use of proceeds for the same - and the final merger terms - with operational targets for the merged entity - will be released at a later stage.
However, RusForest's new management has identified several key investments which need to be made without delay in the existing RusForest structure. The timing of these investments is very important, as they will need to be made before autumn and the planned capital raising in order to ensure a satisfactory speed of operational improvements during 2010 and stronger cash flows in the coming season.
The investments include;
- Forcefully driving on the installation works at the Rusforest Magistralny sawmill where assembly works at the site will be sped up between July and October 2010, before winter and the end of the outside construction season. Infrastructure, foundations, steel constructions for buildings, sawmilling equipment along with sorting and drying equipment has already been paid for, with only assembly and installation work remaining;
- Investment into electricity grid connection at the Boguchansky LPK sawmill, as already agreed with the relevant authorities;
- Investment into a newly established forest road construction program (road construction equipment to be acquired) in Ust Ilimsk, as a step to ensure the long term development of the Company's harvesting areas and raw material sourcing plan - with focus on stable log supplies in the summer period of 2011.
In order for RusForest to immediately start work on these key development projects and to cover working capital needs over the summer period, while taking into account the cash level as per the Company's latest quarterly report, Vostok Nafta Investment Ltd has agreed to advance, in part, its share of the proposed rights issue. The financing is provided by way of a short term unsecured loan in the principal amount of USD 6 million with a bullet maturity on September 30, 2010, and a fixed annual interest rate of 15 percent.
About RusForest AB (publ)
RusForest is the only listed Russian forestry and sawmilling company, with operations based in Eastern Siberia and long term leases covering over 850 thousand hectares of forest land. Russia has the world's largest forest reserves by a significant margin, and Eastern Siberia is world renowned for its Pine and Larch of exceptional quality.
Through a series of acquisitions and development projects RusForest increased sawnwood production by 37.9% in 2009, to 166,333 m3, in spite of weak market conditions. RusForest has a number of exciting development projects, in particular the turn-key sawmill in Magistralny which is expected to add a further 50% to RusForest's sawnwood volumes upon completion. RusForest AB's Certified Adviser on First North is HQ Bank.
For further information please contact:
Martin Hermansson, CEO, phone: +7 903 015 64 65, +7 985 921 92 32
or
Erik Löfgren, External Relations, phone: +7 910 417 7670
