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Mondi abandons Russian plant sale due to sanctions

British paper and packaging firm Mondi Plc said on Monday it would terminate a 95 billion rouble ($1.17 billion) deal with an investment fund to sell its largest Russian plant, as sanctions on Moscow make it difficult to complete the transaction.

The company had agreed to sell Mondi Syktyvkar, a pulp, packaging paper and uncoated fine paper mill, to Russian fund Sinara in December 2021.

However, Mondi said on Monday that it had decided to terminate the deal "due to the current environment and the resulting uncertainty regarding the completion of the transaction."

Mondi's London-listed shares fell 2% in morning trade.

The company said it would continue to operate Mondi Syktyvkar as a going concern and that it was "committed to its employees and customers in Russia."

Mondi is the latest foreign company to scrap a deal in Russia since Moscow invaded Ukraine in February.

In March, British oil major BP Plc said it would exit its 20% stake in Russian oil giant Rosneft, while French carmaker Renault SA said it would sell its 67.6% stake in Russian carmaker AvtoVAZ.

The United States, the European Union and other Western countries have imposed a series of sanctions on Russia in response to the invasion of Ukraine.

The sanctions have made it difficult for foreign companies to operate in Russia and have led to a sharp decline in the value of the Russian ruble.

Mondi said the termination of the deal with Sinara would not have a material impact on its financial results.

The company said it would book a one-off charge of 95 million euros ($100 million) in the first quarter of 2023.

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