Regional authorities doubt viability

Published: 5/11/2000

After the collapse of the plans to turn the former Vezhevo air force base into a cargo airport in 1999, after the withdrawal of funding from the airport's owner Leningrad Oblast. It appears the Oblast is following through on its plans announced in April of last year to privatize part of its 100% holding. According to local reports, the seller is looking for buyers for 75% of the airport minus one share through an investment tender. According to the senior management of the airport, there are at least 2-3 buyers interested in the airport and Vyborg Airport's General Director Roman Baryshinikov hopes that one of them will provide an investor who is committed to developing the airport 130kms north west of St Petersburg. The tender is scheduled to take place in mid summer according to reports with the Federal Securities Commission planning to issue 28m shares in the enterprise. For the creditors of the airport, the conversion to open joint stock company carries some risks for the repayment of the airport's $1m of debt, which has accumulated since 1995. There have been court actions in the past to recover the debt by the sequestration of the airport's property and efforts have been made to seize assets. The airport's management however, has said that many of the actions taken against it, were not defended due to lack of resources or were undertaken by suppliers that had failed to fulfill contracts. Baryshinikov therefore intends to challenge many of the outstanding claims after the establishment of the open joint stock company with the obvious intention of not paying the full value of the reported debt. According to the airport they require any incoming investor to commit between $14-15m to the project to render the airport viable, but “a few hundred thousand dollars” will allow it to meet the federal airport standards to operate. The Vyborg Airport development has had a couple of goes at being established as a commercial venture since it was handed over by the air force in 1994. The latest being a plan in 1997 floated by the US Airlis Development Group, which suggested that with investments of $160m the airport would breakeven in just over 4 years. This was after the airport had stood empty for ten months and had had everything of value removed. Before funding petered out in 1998, a number of the airport's functions were restored including landing equipment and some of the building were rebuilt. For the regional authorities, that withdrew future funding from the project in 1999, with the Acting Governor of the region Valery Serdiukov declaring “let anyone own it, but not at the budgets expense”. The chances of the airport succeeding are slim given their contention that the airport is too close to the existing St Petersburg airports to find a natural market.

Article ID: 1758