On May 20, 2021, as a part of the phased consolidation of the assets of CJSC Novoyeniseiskiy Wood Chemical Complex (hereinafter – "NWCC"), Segezha Group (owned by AFK Sistema) signed an agreement on the acquisition of a minority stake in Tegli Holdings Ltd (hereinafter – the "Company") holding a 100% stake in NWCC. It is planned to complete the transaction by July 31, 2021, provided that the terms and conditions of the agreement are fulfilled.

This February, Segezha Group entered into an option agreement on the purchase from Trust Bank (PJSC) of a majority stake in Tegli Holdings Ltd. and acquired from the Bank and Troika Leasing LLC the rights of claim with regard to the credits and debts of NWCC totalling RUB 11.5 bln for RUB 2.3 bln. The execution of the option for the purchase of the majority stake is conditional on the occurrence of specific circumstances.

The acquisition of the minority stake in the Company will allow Segezha Group to further consolidate 100% of control over NWCC and integrate the asset into the Group's perimeter.

Thereafter, as a majority shareholder of Segezha Group, AFK Sistema plans, provided that the transaction is successfully completed, to continue business cooperation with Martin Hermansson controlling a minority stake in Tegli Holdings Ltd. An agreement has been reached with AFK Sistema that Martin Hermansson will be subsequently nominated into the Board of Directors of Segezha Group and will actively participate in the execution of the Group's future projects, especially those related to the development strategy – for example, such projects are aimed at deep wood processing and increasing the volume of sales in Europe and the USA.

The assets of CJSC Novoyeniseiskiy Wood Chemical Complex are located in Lesosibirsk, Kransoyarsk Krai. The town also hosts Segezha Group's timber, fibreboard, and  pellet production cluster – it includes JSC Novosibirsky LDK No. 1, Ksilotek-Sibir LLC, and logging assets.

The purchase of NWCC is of strategic importance for the successful development of Segezha Group's business in Krasnoyarsk Krai. It will help the holding company to increase its capacity of timber production by 30-40% and pellet production – by 55%. The total estimated cutting area of the Group will grow by approximately 37% (by 2.2 mln. c.m.), which will strengthen the resource security of Segezha Group companies and will further allow for the development of the Segezha Vostok project on the construction of a state-of-the-industry deep wood processing biotechnological complex. Moreover, the increase of the cutting volume using the areas of newly purchased NWCC and the co-management of the region's two large companies (NWCC and LDK No. 1) will allow materially increasing the efficiency of wood processing and timber sales. Those two facilities together will produce over 1 mln. c.m. of timber per year at one location (Lesosibirsk).

The Group may also extend the range of its products using the purchased medium-density fibreboard production facility up to 20 mln. sq.m. a year. The logistic infrastructure and river transportation assets (56 items) owned by NWCC too allow the Group to more efficiently develop its raw material transportation system, which will further allow the two facilities (NWCC and LDK No. 1) to add new types of products into their product range, based on different market needs, which, for the said facilities, used to be difficult to achieve.

"In case NWCC is included in Segezha Group, we will be able to extend and strengthen the wood processing cluster we have in Krasnoyarsk Krai. Thus we act in strict compliance with the government-set objective of creating up-to-date production facilities having as closed cycle of high wood processing as possible and capable of manufacture high-added-value products. On a short-term horizon, after the completion of the transaction, we will have to work pretty hard to integrate a new company into the holding company. I would like to emphasize that we are going to not only preserve the staff of NWCC, but also to increase the number of vacancies as a part of coming modernization.

Due to the current pandemic, the global market demonstrates quite significant growth in demand for country houses, more environment-friendly housing in cities, as well as wooden furniture. Given the above, Lesosibirsk, in fact, may be considered the perfect place in Russia for a deep wood processing cluster providing raw materials for the mentioned areas and offering jobs to skilled specialists residing in the region", Mikhail Shamolin, President of Segezha Group, comments.