MOSCOW--(BUSINESS WIRE)--Bonum Capital, an international investment company, has agreed to sell a 100% stake in LLC Inter Forest Rus (“Inter Forest”), which combines 24 forestry assets and substantial forest resources in the Irkutsk and Krasnoyarsk regions, to Segezha Group (MOEX: SGZH) for $515 million.
Bonum Capital structured the transaction, as well as the consolidation into the Inter Forest holding company of assets including leasehold forest land (10.9 million cubic meters annual allowable cut), wood-processing and logging enterprises and a fleet of river vessels.
The $515 million consideration will be split as follows:
$82 million proceeds to Bonum Capital;
Approximately $205 million to settle debts relating to Inter Forest;
Approximately $228 million to settle costs to be incurred by Bonum Capital in relation to the consolidation of Inter Forest.
The transaction is expected to close in 1Q 2022 subject to regulatory and shareholder approvals, assets consolidation and fulfilment of certain other conditions precedent.
Bonum Capital provided Segezha Group with a customary set of representations, warranties and indemnities for a transaction of this kind.
As a result of the transaction, Segezha Group will strengthen its leading position in sawn timber production in Russia and Europe, and will become a top-10 player in the segment globally. At the same time, the company will almost double its resource base, becoming one of the leading leaseholders of forest reserves globally with 16 million hectares under management, and will have one of the largest annual allowable cuts among publicly listed forestry companies worldwide at 23.6 million cubic meters.
Separately, Bonum Capital has entered into a sale and purchase agreement to acquire a stake in Segezha Group from PJSFC Sistema, a publicly traded Russian investment company and the majority shareholder in Segezha Group, for the ruble equivalent of $150 million. As a result, Bonum Capital will increase its shareholding and become Segezha Group’s second largest shareholder with a stake of approximately 13%. The transaction is also expected to close in 1Q 2022 and will be funded with the proceeds from the Inter Forest sale and bank financing.
Murat Aliev, founder and owner of Bonum Capital, said:
“In line with global trends around sustainability and combating climate change, we are strong believers in the outlook for the global forestry sector and see enormous potential for investment in Russian forestry assets, where improvements to operational efficiency and sector consolidation are creating significant opportunities for higher returns and growth of shareholder value.
“Our long-term interests in the sector are now focused on Segezha, which with its outstanding management team and a proven and profitable business model is well positioned to take Russia’s forestry industry to a new global level. As a result of this transaction, we will significantly increase our stake in Segezha Group and become its second-largest shareholder. We believe that Segezha has the potential to become one of the biggest success stories in Russia’s capital markets.”
Bonum Capital is an investment group founded in 2013 in Moscow. The company’s founder and sole owner is Murat Aliev. Bonum Capital invests in various assets including international public markets, private equity, venture capital and real estate in Russia. The company’s primary business is proprietary investing on public markets with focus on long-term concentrated positions. Bonum Capital has been involved in all major recent CIS IPOs, including OZON, Kaspi.kz, Segezha Group, Fix Price and United Medical Group (EMC). Bonum Capital has expertise in purchasing and developing distressed assets with high potential for value growth, including through synergies with other assets of industry players.
Inter Forest Rus was created as a holding company to consolidate quality assets in the forest industry. Inter Forest Rus currently comprises the core assets of LDK Igirma, Trans-Sibirskaya Lesnaya Kompaniya and Priangarsky LPK, as well as over 20 companies in segments including forest ownership, logistics and operations. Inter Forest Rus has one of the largest annual allowable cuts in Russia (88% softwood) at approximately 10.9 million cubic meters on a consolidated basis. Its production capacity is 1.5 million cubic meters of sawn timber at four sawmills, 35,000 cubic meters of plywood and 170,000 tons of pellets. Its main markets include China, Japan, the EU and Egypt, as well as Russia and other CIS countries. The company employs about 5,000 people. OIBDA for 2021 is expected to be approximately RUB 11 billion.