EGM to seek approval for merger (343 words)

Published: 3/19/2001

Sibir has reported that its Board of Directors has decided to hold an EGM on 27th April 2001, regarding the merger of Sibir and Vnukovo Airlines. The new entity will most likely be renamed. Sibir says that both the Ministry of Federal Property and the Ministry of Transportation have approved the merger of the two airlines, although the Ministry of Federal Property will retain at least 25% of the united company, although Sibir expects the holding to be sold. Currently the Ministry holds 25% of Sibir with a golden share in VAL. In line with Russian corporate law, 75% of both companies' shareholders must approve the merger, although how the merger is to be achieved without taking responsibility for Vnukovo's debts is yet to be discussed; Sibir having made it clear that the merger is conditional on such a restructuring. According to Sibir's spokesman, both Sibir and VAL are in favour of such moves. The Board of Directors for both companies will meet soon to discuss the proposal. Sibir has also reported discussions with the Ministry of Federal Property over plans to issue ADRs against the 25% stake the State will have in the united airline, as an option for its disposal. The issue will take place after the two airlines merge, in about nine months time. Sibir has been managing Vnukovo's routes since January. In 2000, Sibir carried 832,728 passengers, 11.8% more than in 1999, making it the fourth largest carrier in Russia after Aeroflot (5.1m passengers), Pulkovo (1.6m) and VAL (0.9m). In 2000, Vnukovo Airlines carried 905,200 passengers, 3% less than 1999. Currently, Sibir operates 8 Il-86s, 11 Tu-154Bs, 16 Tu-154Ms and 2 Tu-204s. In February, it acquired 1 Tu-204 from VAL for $16.9m, and also 1 Il-86 and 8 Tu-154Ms for a total of $7.18m; the money being used to pay off VAL's creditors. The company's fleet currently stands at 22 Il-86s, 17 Tu-154s, 6 Tu-204s - but only 5 Tu-154s and 1 Il-86 are serviceable.

Article ID: 2428