OREANDA-NEWS. November 11, 2011. RusForest's Board has signed a tender letter to Clean Tech East regarding an acquisition of all shares in Clean Tech East's wholly owned subsidiaries EBH and BEN - which together form Clean Tech East's Biomass Fuels business segment, whose business is to manufacture and sell wood pellets, as the company said in a press release received by Lesprom Network.

The proposed acquisition is, amongst other things, conditional upon approval by an Extraordinary General Meeting in Clean Tech East to be held on 9 December 2011.

RusForest is offering to pay SEK 78 million (USD 12 million) for 100% of the shares in EBH and BEN. The internal claims Clean Tech East have against EBH and its wholly owned subsidiary Ystad Pellets Ltd ("YPAB") will be written off in a sale and the stated purchase price is based on RusForest acquiring EBH and BEN as debt-free companies.

All assets relating to Clean Tech East's wood pellet production are included in EBH - that is, the pellet-producing plants in Ystad in Sweden and in Liepaja in Latvia, with a combined maximum production capacity of more than 100,000 tonnes of pellets per annum, and the packaging plant for packaging wood pellets in bags for resale on the consumer market. The packaging plant is adjacent to EBH's production facility in Ystad.

BEN, which was acquired by Clean Tech East in the spring of 2011, is a company that during the last few years has developed a complete project plan on the establishment of large scale wood pellet production in Arkhangelsk in northwest Russia. This plan covers, amongst other things, the technological, financial and logistical aspects of an establishment.

The RusForest Board believes that the production of wood pellets on a large scale is an attractive next step for RusForest - by increasing the value added, leading to a better utilization of the by-products generated in the Company's sawmill production - and as an important diversification of the Company's current business. An acquisition of EBH and BEN gives RusForest access to otherwise hard-acquired plant-specific skills necessary to run a large-scale pellet plant.

The acquisition will also give RusForest access to pellet production and proven equipment that has been in production, and can therefore relatively quickly be moved to Arkhangelsk and put into operation immediately adjacent to RusForest's existing sawmills in the port of Arkhangelsk - in an area where the price of good quality raw materials is very competitive in a global perspective.

"The acquisition of Clean Tech East's pellet operation will enable RusForest to eventually offer an integrated energy solution, which in a natural way makes the green energy from our forest resources available to customers in the global heating and electricity segments at a competitive price. Our aim is to establish cooperation with one or more partners in the energy segment in order to move EBH's production plants to Arkhangelsk as soon as possible and to initiate a large-scale production of wood pellets there", says RusForest's CEO Martin Hermansson.

The Board of Clean Tech East cannot not form a quorum on the issues relating to the tender signed by RusForest, since three of the five members of Clean Tech East's Board are not considered to be independent in relation to RusForest or to RusForest's and Clean Tech East's largest shareholder Vostok Nafta Investment Ltd. For this reason, the Board of Clean Tech East has referred the received tender to an Extraordinary General Meeting. The EGM is scheduled to be held 9 December.

RusForest is forestry and sawmilling company operating in Eastern Siberia and the Arkhangelsk region of Russia. The Company controls long term forest leases with an annual allowable cut of approximately 3.6 million сubic metres, and utilizes these resources to produce a wide range of sawnwood products.