«STATE WILL REASONABLY MANAGE ITS HELICOPTER ASSETS»"Vremya Novostei", 04.10.2005
Last week helicopter production group that is being formed under the management of “OPK “Oboronprom” JSC made two important steps towards integration of the companies involved. The Federal Financial Markets Service has registered additional issue of “Oboronprom” JSC shares – now the company can gain control over the helicopter plants by means of exchanging its securities for their shares. Moreover, it was decided to create a united management institution for the whole group. The “Oboronprom” General Director Denis Manturov tells “Vremya Novostei” reporter Mikhail Kukushkin about these and other changes in Russian helicopter production business.
-- In accordance with the Governmental Decree the acquisition of majority interest in the companies that are involved in the group have to be finished by September, 1. Did you manage to meet this deadline?
-- In fact the wording of the task was a bit different. The Decree stated that “Rosimushchestvo” and “Rosprom” together with “Oboronprom” by the end of the year should work out a program which stipulates increasing capital share of the corporation in the authorized capital of these companies up to 50% plus one share. The date was not specified. Nevertheless, today “Oboronprom” directly or indirectly holds majority interest in the companies mentioned in the Decree.
Recently Federal Financial Markets Service has registered the additional “Oboronprom” emission of shares, which are exchanged for blocks of shares held by the Russian Federation, Tatarstan and the “Rosoboronexport”. We plan to complete transfer orders processing and these shares will be transferred into our balance till the mid-October. As a result of these operations, the “Oboronprom” will hold more than 88% of the Ulan-Ude aircraft plant shares. In July “Oboronprom” affiliated companies acquired from “Kaskol” 25% of the UUAP shares. Taking into account 49% of state shares that are being transferred, 18% and 14% that are owned by “Rosoboronexport”, we get this 88% block of UUAP shares.
From the very beginning in Stupino Machine-Building Production Enterprise we get majority interest – 60%. In the Moscow Machine Building Plant 38% of shares is held by the state and 12.5% of the shares was acquired by the “Oboronprom” earlier, so together it makes 50.5%.
In the Moscow Helicopter Plant we will have 62% of shares: 31% of which we are getting from the state and another block of 31% was recently bought from the Interregional Investment Bank by friendly companies that are ready to exchange these assets for “Oboronprom” shares in the future.
In the capital of the Kazan Helicopter Plant we have the block of 29.92% of shares which are transferred from the Tatarstan Government.
-- What sort of agreement did you have with the Tatarstan Government concerning these shares transfer?
-- We are going to exchange 15.07% of the “Oboronprom” shares for 29.92% of KHP shares that are owned by the Tatarstan government. Such correlation is based on evaluation of all helicopter assets that are subscribed to the authorized share capital of “Oboronprom”.
- So, you will get KHP shares simultaneously with federal blocks of shares?
- That’s correct. As soon as we get documents from the Federal Financial Markets Service about emission registration, we will forward them to “Rosimushchestvo”, “Rosoboronexport”, Tatarstan Government and “Rostvertol”. This company is one of “Oboronprom”’s shareholders, which in exchange for our shares submits funds – RUR 144 mln. We are planning to use them for acquiring additional emission shares of the “Rostvertol” itself.
-- What is the reason for the “Rostvertol” and its private shareholders to be involved into helicopter group with state-owned majority interest?
-- Main production of the “Rostvertol” is of military kind (Mi-24 and Mi-28 attack helicopters). If the state is not represented among “Rostvertol” shareholders, the process of defense order placement and its implementation will be difficult to organize and control. Present owners of the plant are aware of this. Besides it is not at all unprofitable from the financial point of view. The money, they will now pay for “Oboronexport” shares, will come back to them later as payment for their shares. Thus, we are offering to get blocking (taking into account 3.73% of state-owned “Rostvertol” shares) shareholding in Rostov plant.
-- Have you held negotiations with “Rostvertol” owners about increasing this block of shares up to majority shareholding?
- We do not accelerate this process and have no goal of fulfilling this task in the years 2005-2006. We have agreed with “Rostvertol” management to limit our activities till the end of 2006 by acquiring blocking shareholding of the plant. But at the second stage, in 2007, we are going to increase our block of shares and get majority shareholding (50% plus one share). I would like to point out that all this happens on the basis of mutual consent and nobody forces anyone to do anything. We are still discussing the ways that can be used to acquire other blocks of “Rostvertol” shares: it can be both buying-out and exchange for “Oboronprom” shares.
-- Are the holding unified management bodies being formed?
-- Last week general directors of “Oboronprom”, “Mil” Moscow Helicopter Plant, Ulan-Ude Aviation Plant, Kazan Helicopter Plant, “Rostvertol”, Moscow Machine Building Plant and Stupino Machine-Building Production Enterprise signed corporate agreement which determines main principles and mechanisms of interaction between the holding members as well as their rights and responsibilities. It is also stated there that holding members will not lose their legal independence even after entering the holding. To coordinate cooperation on the basis of “Oboronprom” there will be created a collegial management body –council of helicopter production group. Its members will be general directors of all companies involved. Besides, in the “Oboronprom” structure a new directorate for helicopter programs will appear. The head of this division will be at the same time my deputy.
- They say that you are not going to stop at acquiring “Mil” production plant, but intend to make “Kamov” company a member of the holding as well. At what stage are the negotiations about acquisition of 50% of “Kamov” shares from JSFC “Sistema”?
- At the final stage. For them – helicopter production is not a core business, unlike us. And taking into consideration good relations of our companies we are reaching mutual understanding in this matter.
-- Aren’t you going to acquire the block of shares (49.3%) that is at the moment owned by another major “Kamov” shareholder - Russian Aircraft Corporation “MiG”?
- At this stage it will remain under control of RAC “MiG”. At least, till the moment when the issue of United Aircraft Company structure and “MiG” corporization (transformation into a joint-stock company) is solved. It is obvious that the state will reasonably manage these helicopter assets. In any case it is not expedient to leave “Kamov” company within the structure of an aircraft holding.
-- What’s the point of uniting in one holding two competing helicopter companies? Won’t it result in liquidation of one of them in the long run?
-- We have no goal of liquidating “Kamov” company via joining it with “Mil”. Both design schools must be preserved. We believe that it is necessary to leave for “Kamov” those niches that it traditionally occupied – such as ship-borne and firefighting helicopters as well as helicopters for logging. Though, the issue of model line optimization is not the topic to be discussed right now as the shares acquisition transaction has not been finished yet.
-- Can you in general outline the financial situation in the companies that are now the members of “Oboronprom” holding?
-- They’re financially stable. And the banks from the point of view of creditworthiness estimate them in the same way. And it’s a good sign.
The “OPK “Oboronprom” is a production-investment corporation, the authorized share capital of which on the parity principle is divided between federal state unitary enterprise “Rosoboronexport” and the “Rosimushchestvo”. The amount of authorized share capital before new emission amounted to 1.442 billion rubles, and after - 4.3 billion rubles. Helicopter production group headed by “Oboronprom” is created in accordance with Decree of the President of Russian Federation dated November 29, 2004 and governmental decree dated May 6, 2005. Pursuant to these documents “Oboronprom” authorized share capital is expanded by means of adding state-owned in Ulan-Ude Aviation Plant (UUAP 49.18%), “Mil” Moscow Helicopter Plant (MHP, 31%), Kazan Helicopter Plant (KHP, 29.92%), “Vpered” Moscow Machine Building Plant (MMBP, 38%) and Stupino Machine-building Production Enterprise (SMBPE, 60%). According to additional emission placement results, 51% of OAO “OPK “Oboronprom” JSC shares will be owned by the state (represented by “Rosimushchestvo”), 31.13% - will be under operating (economic) control of federal state unitary enterprise “Rosoboronexport”, 15.07% - in the ownership of Tatarstan Government and 2.79% will be held by Rostvertol JSC. “Oboronprom” company has control over several companies that are not involved in helicopter production, such as “Defense Systems” JSC (more than 75% of shares) and “Oboronpromlizing” Closed JSC (100% of shares).
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