Stockholm, 2011-03-28 18:00 CEST (GLOBE NEWSWIRE) --
In order to expand RusForest AB's (publ) ("RusForest" or the "Company") operations in the Arkhangelsk region, the Company has entered into a sale and purchase agreement with the shareholders of Clonri Holding Limited and Piatkowski Holdings Limited, which together with subsidiaries comprise the Nord Timber Group ("NTG"), regarding the purchase of shares in and receivables from NTG against payment in the form of newly issued shares in RusForest. The total consideration amounts to 29,437,529 RusForest shares. The acquisition is conditioned upon, inter alia, the extraordinary shareholders' meeting on 15 April 2011 approving the proposed increase of the share capital thresholds in RusForest's articles of association, and on the Board of Directors resolving in accordance with its authorization to issue the consideration shares.
"This acquisition will jump-start RusForest's transition into a major integrated Russian forestry company able to supply the global market with first class timber products. Through NTG, RusForest will gain access to unique resources in the Arkhangelsk region which complement the Company's existing operations well. The available synergies, both in terms of assets and expertise, should help increase profitability substantially going forward", says Sven Hirdman, chairman of the board of RusForest AB.
The planned acquisition of NTG is strongly supported by RusForests main shareholder, Vostok Nafta Investment Ltd.
"Forestry land is the last major asset class that has yet to be privatized in Russia. As an active investor in Russia for the past 15 years, we have seen sector after sector being privatized - and how enormous values have been created as a result of these privatizations. With the acquisition of NTG and the combination of a very strong presence in eastern Siberia as well as in the Arkhangelsk region, RusForest's shareholders are in an excellent position to reap the benefits of the coming transformation within the Russian forestry sector", comments Per Brilioth who is the managing director of Vostok Nafta Investment Ltd and a member of the Board of Directors of RusForest.
Background and Reasons
Through the acquisition of LDK-3 in December 2010, RusForest gained a strong foundation for its sawmilling operations in the Arkhangelsk region. Through the acquisition of NTG, the Company's Annual Allowable Cut (AAC) in the Arkhangelsk region will amount to 984,800 m3 which will cover the future raw material requirements of the sawmill at LDK-3.
NTG is a company with large forestry assets located in the Arkhangelsk region in North-western Russia. NTG has forest leases exceeding 1.1 million hectares containing high quality Spruce and Pine resources similar to those found in northern Sweden.
NTG's forest leases are FSC certified and the company is well-established in the region with newly built forest roads and its own railway terminals giving increased control of logistics and costs. The forest leases have an annual allowable cut of 807,600 m3
Harvesting levels can be ramped up quickly thanks to its strong operative management team and the previous owners' clear focus on infrastructure developments. Additionally, NTG owns a sawmill in the region, which is being upgraded to reach an annual capacity of 80,000 m3, and a planing mill in the city of Arkhangelsk.
Following the acquisition, RusForest will control an AAC of approximately 2.8 million m3 - positioning the Company as one of the largest forest-controlling companies in Russia in terms of cutting rights. The planned production capacity at LDK-3 can be increased and the Company's long term targets will subsequently be re-adjusted upwards.
As a result, RusForest will be established as a true global player, with a sawn wood output growing over the next 4-5 years to around 800,000-850,000 m³ per annum, backed up by 2.7-2.9 million m³ logs harvested from the Company's own forest leases.
The acquisition of NTG is conducted by way of an issue in kind with newly issued RusForest shares as consideration. In order to enable such issue in kind, the share capital limits as set out in the Company's articles of association need to be amended. For this reason, the Board of Directors has convened an extraordinary shareholders' meeting to be held on 15 April 2011, as previously announced. Provided that the shareholders vote in favour of such amendment of the articles of association, the closing of the acquisition of NTG will take place shortly after the registration of the amended articles of association with the Swedish Companies and Registration Office. The agreement also contains other conditions to completion, such as the sellers having completed certain changes to the capital and ownership structure of the target companies to the satisfaction of RusForest, audit of the 2010 NTG annual accounts having been completed to the satisfaction of RusForest and not materially deviating from the 2010 management accounts presented to RusForest, as well as other conditions customary for transactions of this kind.
RusForest CEO Martin Hermansson and Lillevrå Såg AB own approximately 19 per cent of the shares in NTG. Therefore, Martin Hermansson has not been involved in any negotiations with regard to RusForest's acquisition of NTG. In addition, Martin Hermansson and Lillevrå Såg are subject to a two-year lock up with respect to their consideration shares (in the case of Lillevrå Såg with respect to half of the consideration shares only).
For further information please contact:
Per Brilioth, Board Member, phone: +46 8 545 015 50
or
Anders F. Börjesson, Deputy CEO, phone: +46 709 19 08 58
About RusForest AB (publ)
RusForest is a forestry and sawmilling company operating in Eastern Siberia and the Arkhangelsk region of Russia. The Company controls long term forest leases with an annual allowable cut of approximately 2 million m3, and utilizes these resources to produce a wide range of sawnwood products. Eastern Siberia is renowned for its Pine and Larch of exceptional quality, while the Arkhangelsk Region in northwest Russia has high quality spruce and pine forests similar to those found in northern Sweden.
RusForest's goal is to develop into a leading independent integrated forestry and sawmilling company in Russia, with an annual harvest of 1.8-2.0 million m3 and an annual sawnwood production of 550,000-600,000 m3 during the coming four years.
RusForest AB's Certified Adviser on First North is E. Öhman J:or Fondkommission AB.
