Segezha Group acquires Novoyeniseiskiy Wood Chemical Complex

As Kommersant Newspaper reports, Lesosibirsky LDK No.1 (part of Segezha Group) sent an application to participate in the auction for the sale of the assets of Novoyeniseiskiy Wood-Chemical Complex (NWCC) on February 15, 2021. Lesosibirsky LDK No.1 was the only bidder for the asset that comprises the rights of Trust bank of non-core assets (owns 71% of the asset) to claims under loans and debts of various kinds for a total of 11.5 billion rubles. In addition, the lot comprises the rights to enter into an option contract for 71% of the shares of Tegli Holdings Ltd. (owns NWCC) and agreements with Trust and Lariena on the rescheduling of the debt obligations of the enterprise and compensation for losses. Kommersant announces the deal price of 2.3 billion rubles.

However, Trust’s press office reports that the bidding was invalidated since only one bid was submitted within the auction, and thus the bank becomes entitled to make a sale offer to that buyer. Segezha Group has also confirmed its application to Kommersant.

According to WhatWood’s estimates, if Segezha Group acquires Novoyeniseiskiy Wood Chemical Complex, the company will increase its sawmilling capacity by 470,000 m³ to 1.7 million m³ and will become the undisputed leader in the Russian sawn timber market in terms of installed capacity in Russia.

Segezha Group has strong competencies in the timber products market. Its product portfolio comprises all types of wood processing products from paper to packaging, from sawn timber and wood-based panels to wood pellets.

Thanks to the deal, the company will significantly strengthen its operations in Siberia and substantially expand its supply of raw materials in the Krasnoyarsk region. Moreover, the forest areas of the assets to be acquired almost 100% coincide with the current location of the forest raw material supply areas of Segezha Group’s enterprises in the Krasnoyarsk region. Namely, they coincide in Gremuchinsky, Yeniseysky, Nizhne-Yeniseysky, Nevonsky, Motyginsky, Khrebtovsky forestry units.

The proposed deal is presumably another step in the implementation of the idea to build a pulp and paper mill with a capacity of 1 million tons in the Krasnoyarsk region being deeply and consistently developed by Segezha Group. At the end of 2020, Sistema JSFC already announced its plans to expand its operations through the acquisition of Sibirsky Les and BackHill with forest assets in the Krasnoyarsk region.

According to WhatWood’s ranking of the top 100 timber companies of Russia, Segezha Group takes third place in terms of revenue. Novoyeniseiskiy Wood Chemical Complex is ranked 71st among the largest Russian timber companies. Its AAC is 2.2 million m³ per year, the output of wood pellets is 80,000 tons, of dry-process fiberboards – 16.9 million m², of sawn timber – 472,000 m³. The net loss of Novoyeniseiskiy Wood Chemical Complex for 2019 totaled 341 million rubles, the revenue was 4.2 billion rubles, the debts are estimated at 11.5 billion rubles.