INTERVIEW: Russia’s Segezha pulp mill to resume ops by end-Feb

Interview with VTB Bank’s CEO Andrei Kostin

MOSCOW, Feb 10 (PRIME) -- The Segezha Pulp and Paper Mill in the constituent republic of Karelia is expected to resume operations by the end of February, Andrei Kostin, CEO of Russia’s VTB Bank, said in an interview with PRIME Friday.

The Bank of Moscow, controlled by VTB Bank, holds a 20% stake in Russia’s timber industry holding Investlesprom, the parent company of the mill.

The mill suspended operations on January 31 after it failed to pay for raw timber supplies, due to a lack of financing.

“We expect the mill to start operating within the last 10 days of February,” Kostin said.

Earlier in February, the Bank of Moscow opened a 400 million ruble credit line to Investlesprom to replenish working assets of the mill.

“In the near future we will consider the possibility of providing an additional 400 million rubles toward the investment purposes of the mill (in order to) to solve the most vital issues linked with its upgrade,” Kostin said.

The combined debt of Investlesprom was estimated at 40 billion rubles, including 30 billion rubles owed to the Bank of Moscow. The mill is a guarantor of the main part Investlesprom’s liabilities.

“This (the debt) makes the mill unprofitable. We said it in the very beginning that it will be difficult to return 100% of this amount. However, the Segezha Pulp and Paper Mill is one of the best companies of Investlesprom. It is operational, and which is the most important, has a unique position on the market, as there are no problems with demand for its products,” Kostin said.

“Our goal is to stop thievery at the mill and to return it to a profitable level, and then to decide how to solve issues with its accumulated debt,” he said, adding that the first goal is to be achieved within the current year.

The remaining shares of the mill, which are owned by non-residents, are currently frozen by a Tver court.

(29.6795 rubles – U.S. $1)

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