Charges of illegal issues and hidden ownership(674 words)

Published: 5/31/2001

Aviastar's new shareholder, Novoye Sodruzhestvo (New Community), may not be all that it seems, according to a report in Moscow daily, Vedomosti, which further suggests that the recent issuance of the shares to New Community (NC) could be illegal, given that it appears to lack the official agreement of the board of OAO Tupolev, which owns 77% of the producer. When the announcement of NC's acquisition of a stake in Aviastar-SP was made in April, the size and extent of its investment was rather unclear. Reports inferred that the industrial holding company had acquired at least 25%, so giving it the status of a blocking shareholder. Comments from the NC management suggested that the intention was to increase the investment further, after an initial commitment of a reported Rb2 billion for the development of production over the next two years. According to the Vedomosti, however, an unnamed director of OAO Tupolev is claiming that the issue of the additional shares in Aviastar-SP did not have the approval of the Tupolev board and has described the dilution as “illegal”, as it additionally reduced the indirect interest of the state, which owns 50% of Tupolev. The dismissal of Aviastar-SP's General Director and other members of senior management, reportedly at NC's request, are also regarded by the unnamed director as overriding Tupolev's role as controlling shareholder, in an effort to attract investment. However, the procedural niceties of who had the right to do what, are as nothing to the gathering storm relating to the nature of NC itself. Vedomosti reveals that the company's shareholding structure is extremely opaque, with a number of intermediary companies between the public shareholder of NC and the ultimate owners. These have been established by the newspaper as four individuals (33%), a yacht club (19%)and a cat fanciers' club (19%). According to Vedomosti, NC's management has not responded to questions over its ultimate management and cannot be contacted. The unnamed Tupolev director has suggested that anything irregular in the beneficial ownership of NC could lead to the deal being cancelled. Yury Koptev, Director General of the Russian Aerospace Agency (RAKA) and Chairman of OAO Tupolev, who represents the state on the company's board, has made no statement concerning the reports of illegal dilution and shadowy buyers. He was, however, according to sources, fully aware of events regarding the plant, but refrained from acting and is reported to have said that he would not stand in the way of the investment, as he had nothing to offer the plant, since the state was not prepared to commit funds. This viewpoint was recently contradicted by comments from Deputy Prime Minister, Ilya Klebanov, indicating the government was, in fact, willing to invest. Officially, RAKA has taken the curious stance of claiming that the stake has not been sold. According to Vyacheslav Mikhailichenko, Deputy Head of RAKA's press-service, no changes in the shareholders of the plant took place as per the registrar, therefore there was no direct stock sale. Mikhailichenko says that, according to his information, the plant's board only signed an investment agreement, “management against investments”, relating to the conditions of possible commitment. Such an agreement, in his opinion, however, could have not been signed without the approval of the Tupolev's President, Alexander Polyakov. Although Mikhailichenko has not seen the agreement, Vedomosti reports him as saying that if NC fails to meet its investment commitments, it will lose its investment, but if it does meet the agreed levels, it will hold 48% of Aviastar-SP. According to Mikhailichenko, NC is currently paying wage arrears at the plant: a rather odd action for a company that RAKA claims does not have a holding in Aviastar-SP. Events around Russia's largest aircraft facility have always been interesting, but recent revelations suggest that there is plenty of intrigue still to come. This is particularly so against the backdrop of the reorganization of the sector into single centrally controlled entities, capable of encompassing both state and private interests, in vertically integrated aircraft manufacture.

Article ID: 2569