War in Ukraine: Mondi completes Russia exit with paper mill divestment

21 Sep 2023 --- Mondi has completed its exit from Russia by selling its last remaining facility, Syktyvkar, to Sezar Invest, a Moscow-based real estate development company. The deal, valued at approximately €775 million (~US$826 million), will be paid in six monthly installments starting at the end of September.

Mondi Syktyvkar, a fully integrated pulp, packaging paper and uncoated fine paper mill located in the Komi Republic, was a wholly-owned asset of Mondi and employed approximately 4,500 individuals. The facility was a leading provider of uncoated fine paper and containerboard to the domestic Russian market.

In 2022, Mondi Syktyvkar reported revenues of €1.085 million (US$1.155 million) and as of June 30, 2023, the gross assets of the business amounted to €1.107 million (US$1.179 million).

The initial four monthly payments will each amount to RUB 13.5 billion (~US$140 million), expected to be completed by the end of December 2023. The remaining RUB 26 billion (~US$270 million) will be paid in two equal installments over the two months following the completion, backed by a letter of credit issued to Mondi before the transaction’s finalization.

The net proceeds from this disposal will be distributed to Mondi shareholders upon receipt of all consideration installments.

The Russian divestments by paper packaging groups and forestry standards authorities have impacted the economy.Mondi confirms that the Russian Federation’s Federal Anti-Monopoly Service and the Government Sub-Commission for the Control of Foreign Investments have approved the transaction on the agreed terms between Mondi and Sezar Invest.

There are no outstanding regulatory conditions concerning the sale.

Russia-Ukraine war 
Mondi’s decision to divest its Russian business was announced in May 2022 in response to concerns about the war in Ukraine and its humanitarian impact. The move came after criticism over the company’s continued presence in Russia, which it had argued was beneficial to local communities and had no impact on those in power.

The divestments by major paper packaging groups and forestry standards authorities in Russia and Belarus have significantly impacted the Russian economy, global price dynamics and environmental sustainability initiatives.

Timber, as the fifth-largest export sector for Russia, represents about 3% of the country’s total export value and approximately 8.5% of the total non-fossil fuel export value.

Other packaging giants such as Huhtamaki, Stora Enso and Tetra Pak have also divested their Russian businesses due to the ongoing conflict.

By Radhika Sikaria