Tupolev faces court action over alleged interest payments as the dispute between the two sides takes another bitter turn (431 words)

Published: 10/15/2001

New Community (NC), smarting from the failure of its bid to take control of Ulyanovsk-based Aviastar, has filed a suit with the Rostov Arbitrage Court for the repayment of the monies that it invested in the plant between April and July this year. Under an agreement signed with Tupolev in April, NC advanced the funding to the plant for a 15 year period, as part of a deal that would give the industrial holding company control of the plant within two years. The original deal was followed by an additional agreement signed between NC and Aviastar-SP (controlled by NC managers) on 3rd September, almost two months after NC stopped investing after disagreements over the transfer of control, that upped the interest rate on the original funds advanced from 0.1% to 30%, with penalties of 0.5% a day. NC has also taken a lien on the Tu-204 completed under its tenure at the plant. Tupolev says it is willing to pay back the investment, but not the 30% interest payment. Tatyana Ruzayeva, Director of Corporate Development, points out that NC parties were represented on both sides of the agreement. NC, however, says that the managers from Aviastar were authorised to sign such agreements by the Aviastar board, so the deal is quite legal. The regional administration has also stated its desire to have the outstanding matter cleared up as soon as possible, suggesting that both Tupolev and the local government see outstanding litigation as a barrier to attracting new investment. Mikhail Mirimsky, an advisor to the region's governor, has been reported as saying that the Tupolev board plans to pay back at least the principal sum within two or three weeks. It remains to be seen whether this timetable will be disrupted by the legal action, with a first hearing scheduled for 15th October. As for potential new investors, the parties involved also seem split on who these might be. The state, despite its obvious lack of enthusiasm for such commitments, remains one of the candidates, as does Dr Kamal of Sirocco Aerospace International, who, according to Mirinsky in press reports, has said he would commit $200m at a recent briefing with Governor Vladimir Shamanov. Dr Kamal has so far made no comment on the issue, but it seems unlikely that such an undertaking would have been made at this point. Or, if it had, one would have expected to hear a great deal more noise from all concerned.

Article ID: 2826