Mondi Soars After Agreeing $1.55 Billion Disposal of Russian Paper Mill

© Reuters.

By Geoffrey Smith

AiVIF.com -- Mondi Group (OTC:MONDY) (LON:MNDI) shares soared on Friday after the paper and packaging group said it had found a buyer for its biggest Russian operation. 

Mondi, which had drawn criticism in the wake of Russia's invasion of Ukraine for being slow to withdraw from the operation, said it had agreed to sell Mondi Syktyvkar to Augment Investments, the holding company of businessman Viktor Kharitonin, for 95 billion rubles - around $1.55 billion at current exchange rates.

Syktyvkar has for nearly two decades been one of Mondi's most reliable cash cows. Last year, it generated earnings before interest, taxes, depreciation and amortization of some 334 million euros on revenue of only 821 million. It earned another 225 million euros in the first half of this year, despite the outbreak of war.

Kharitonin has been identified by Russian media as a close confidante of deputy Prime Minister Tatyana Golikova and her husband, the former Industry Minister Viktor Khristenko.

Such links should smooth the process of gaining approval from the Russian government's Commission for the Control of Foreign Investments, and the customary antitrust approvals.

Mondi will also need the approval of the Russian authorities to pay out some 255 million in cash as a special dividend to the parent company ahead of the sale, which Mondi wants to complete in the second half of this year.

It warned, however, that "the divestment process for these significant assets is operationally and structurally complex and is being undertaken in an evolving political and regulatory environment."

The three other, smaller operations in Russia operated by Mondi aren't part of the deal.

Mondi shares closed up 11.2% at their highest since the war's outbreak.