Stockholm, 2010-09-15 18:00 CEST (GLOBE NEWSWIRE) --
In order to start work immediately on key development projects, RusForest AB (publ) ("RusForest" or the "Company") received interim financing, on July 1, 2010, amounting to USD 6 million from Vostok Nafta Investment Ltd ("Vostok Nafta") in the form of an advance, in part, of Vostok Nafta's share of a proposed rights issue currently being evaluated. The unsecured loan had a bullet maturity on September 30, 2010, and a fixed annual interest rate of 15 percent.
The key development projects announced, and commenced, on the 1st of July included;
- Forcefully starting the installation works at the RusForest Magistralny sawmill;
- Investment into electricity grid connection at the Boguchansky LPK sawmill;
- Investment into a newly established forest road construction program in Ust Ilimsk;
- Covering working capital needs over the summer period.
Due to that the negotiations with Nord Timber Group and another potential acquisition target in the Arkhangelsk region have taken longer than initially expected, and as mentioned in RusForest's Q2 Report, the timing of the proposed rights issue has also been postponed to later this year. As a result, Vostok Nafta has agreed to prolong the current loan until November 30, 2010.
Furthermore, in order for RusForest to continue its development works as per above, and cover its working capital needs for the upcoming harvesting season, the Company has received an additional second advance from Vostok Nafta in the form of an unsecured loan amounting to USD 6 million with a bullet maturity on November 30, 2010, and a fixed annual interest rate of 15 percent.
The continuation of developments possible as a result of the second loan agreement includes;
- Continuation of the installation works at the RusForest Magistralny sawmill ahead of the winter season; up-dates of construction to be published on the Company's website;
- Acquisition of new harvesting equipment, with a capacity of around 150,000 m3, for the Ust Ilimsk district ahead of the winter season;
- Transport capacity is to be increased in both Ust Ilimsk and Magistralny (through investments in new log trucks) in light of the planned increases in harvesting volumes in the areas.
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.
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
RusForest AB's Certified Adviser on First North is Nasdaq OMX Stockholm, Issuer Surveillance
