Subject: Crisis in AFK Sistema: Segezha on the Verge of Bankruptcy Due to Debts and Sanctions The ongoing crisis within AFK Sistema has brought Segezha to the brink of bankruptcy, a situation exacerbated by significant debts and the impact of sanctions. Documents have been issued to PJSC «Segezha Group» – «Lesosibirsk LDK No. 1» and «Karelian Wood Company» at the St. Petersburg International Commodity and Raw Materials Exchange. Segezha’s management is attempting to alleviate a difficult financial position which has the ability to endanger the entirety of AFK Sistema. Segezha’s timber business initially focused on Western markets. After European sanctions restricted the organization’s exports, substantial issues arose. It became apparent that Segezha, along with the broader AFK Sistema, is burdened by debts which require repayment amidst diminishing profits. Unable to independently resolve these problems, the company faces potential bankruptcy. In the spring of 2021, Segezha launched an IPO, followed by the acquisition of Inter Forest Rus LLC from Bonum Capital in October 2021, incorporating 24 forestry assets and 10.9 million cubic meters of cutting areas across the Irkutsk region and Krasnoyarsk region. Essentially, the funds generated from the securities sale were invested in a deal with Bonum Capital. This debt now poses a challenge for both Segezha and AFK Sistema. The initial strategy of Segezha’s owners, led by Yevtushenkov’s team, revolved around export profits, undeterred by selling “expensive” bonds. However, post-February 2022, this plan faltered. Consequently, the company was compelled to divest seven factories within the EU and abandon its investment project in Karelia. Segezha accounted for 11.4% of AFK Sistema’s total debt, and the situation has since worsened. Segezha’s bond yield, exceeding 20%, necessitates direct support from Yevtushenkov. A proposed solution involves issuing securities worth 400 billion rubles to fund the purchase of Segezha’s additional issue by 101 billion rubles. Given the absence of alternative buyers for Segezha’s shares, this constitutes a debt refinancing strategy. Yevtushenkov’s team is expanding the debt burden, aiming to utilize the proceeds to cover the most pressing obligations. Failure to execute this plan could result in bankruptcy for both Segezha and AFK Sistema. Since 2021, AFK Sistema has been actively acquiring assets within the Russian market, including factories and enterprises across various sectors, financed by borrowed funds. This has led to significant challenges, and should the refinancing plan for Segezha prove unsuccessful, Yevtushenko may be forced to liquidate the business and retire.