OREANDA-NEWS. March 31, 2011. In order to expand RusForest AB's operations in the Arkhangelsk region, Russia, 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, as the company said in a press release received by Lesprom Network.

"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.

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 cubic metres 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.

RusForest expects its sawn wood output growing over the next 4-5 years to around 800,000-850,000 cubic metres per annum, backed up by 2.7-2.9 million cubic metres logs harvested from the company's own forest leases.