OREANDA-NEWS. December 05, 2014. RusForest AB sells its Arkhangelsk assets in Northwest Russia for approximately USD31 million, including the related debt. RusForest expects to receive a total of approximately USD 12 million in net cash from the transaction, as the company said in the press release received by Lesprom Network.

RusForest has executed a definitive sale and purchase agreement with several buyers, including Lesozavod 25, for the Arkhangelsk LDK-3 sawmill and related pellet mill, as well as for all of its forest leases and harvesting companies in the Arkhangelsk region for a total of approximately USD 31 million, including all outstanding debt.

The Arkhangelsk sawmill has an annual capacity of 120,000 cubic meters of sawnwood, and the pellet mill has an annual capacity of 100,000 tons of pellets. The Arkhangelsk LDK-3 sawmill and the harvesting company, Severny Les, hold forest leases with 851,000 cubic meters of annual allowable cut (“AAC”).

The transaction is expected to close in the next week. The net cash received by RusForest after repayment of the sawmill’s debts is expected to be approximately USD 12 million. RusForest has already received a cash pre-payment of USD 5.7 million, and the remainder of the cash is expected to be received in four tranches within the next twelve months.

Following the divestment of the Arkhangelsk assets, RusForest will be a debt-free company with a profitable core business in Magistralny, Eastern Siberia. Pro forma for the sale of Arkhangelsk, RusForest has total annual sawmilling capacity of 90,000 cubic meters of sawnwood and forestry leases with approximately 1.7 million cubic meters of AAC.

Matti Lehtipuu, the Company’s Group CEO, commented, “RusForest is a positive example of a business turnaround towards a profitable, debt-free business. Now that we have divested all loss-making and non-core operations, we are committed to increasing profitability and identifying new growth opportunities. We plan to begin negotiating the merger of RusForest with Nova Capital’s profitable forestry business in Eastern Siberia, Lesresurs, and we continue to focus on increasing shareholder value.”

RusForest is a Swedish forestry company operating in Eastern Siberia. The Company controls long-term timber leases and utilizes these resources to produce a wide range of sawnwood products.