In May Mondi announced that it would divest its Russian assets due to the Russian invasion of Ukraine. 

It is has agreed a deal to sell its Syktyvkar mill to Augment Investments for RUB95bn – the equivalent of €1.5bn (£1.27bn) at current exchange rates. Augment is owned by Russian billionaire Viktor Kharitonin, and owns businesses across Russia, Europe and the UK.

Syktyvkar is an integrated pulp, packaging paper and uncoated fine paper mill located in Komi Republic. For the year ended 31 December 2021, Syktyvkar had sales of €821m, EBITDA of €334m and profit before tax of €271m.

It employs approximately 4,500 people and is one of the biggest suppliers of uncoated fine paper and containerboard to the domestic Russian market.

Mondi said that it expected the disposal to complete by the end of the year, but noted that the process was “operationally and structurally complex and is being undertaken in an evolving political and regulatory environment”, meaning the timeframe could not be certain. 

The Syktyvkar assets to be transferred to Augment as part of the disposal exclude a cash balance of RUB16bn (around €255m). 

Mondi said the cash balance is planned to be distributed as a dividend to Mondi before completion, although this requires the approval of the Ministry of Finance of the Russian Federation. 

Net proceeds from the sale of RUB16bn will be distributed to Mondi shareholders “as soon as is reasonably practicable following receipt”.

Mondi's Russian operations accounted for around 12% of the €6.66bn turnover group’s sales by location of production.

It also operates flexible packaging production sites at Peraslavl and Aramil, and makes corrugated products at Mondi Lebedyan.

Mondi’s share price rose by nearly 10%, to 1,682.5p, on the news.