OREANDA-NEWS. On March 26, 2007 Ilim Holding and International Paper announced that they have applied to the Russian Federal Antimonopoly Service (FAS) for approval of the acquisition of rights that will allow the two companies to jointly make decisions regarding the enterprises owned by Ilim Holding SA in Russia. The application was filed today, reported the press-centre of  Ilim Pulp. Obtaining FAS approval presents the next stage towards establishing a joint venture between Ilim Pulp and International Paper in Russia. On October 25, 2006, Chairman of the Board of Directors of Ilim Pulp Zakhar Smushkin and Chairman of the Board of Directors and CEO of International Paper John Faraci signed a letter of intent to form the 50-50 joint venture. The joint venture will be established by International Paper purchasing a 50% interest in Ilim Holding’s stock. The companies intend to close the deal by the end of the second quarter.


Ilim Holding owns the three largest Russian pulp-and-paper mills in European Russia and Siberia, as well as majority share in Saint-Petersburg KPK in Leningrad region. The mills currently are being consolidated into the Russian open joint-stock company, Ilim Group, a subsidiary of Ilim Holding. Ilim Group will be managed jointly by a board of directors comprising representatives of Ilim Pulp and International Paper. The new company will be head-quartered in St. Petersburg.  The joint venture will focus on increasing output of value-added products, such as office papers and packaging, as well as market pulp, in which Ilim Pulp has a leading position in Russia and China. Ilim Pulp’s existing wood products business will operate independently of the joint venture, as will International Paper’s OAO Svetogorsk business.  The prospective partners are currently finalizing a long-term joint investment program exceeding $1,2 billion (over RUR 30 billion) of capital investments. This unprecedented investment in the Russian forest products industry would be used to upgrade operating subsidiaries, increase production capacity by more than fifty percent, and allow for new, value-added product development.