VSMPO supplier share sales declared legal

Published: 6/11/1999

The Moscow Arbitration Court has declared that sales of shares in AVISMA, which supplies VSMPO with its titanium sponges, to be valid. In 1994, the shares of the Perm-based company - Russia"s only titanium sponge producer - had been sold to Mayak, a vehicle controlled by investment group, Menatap-Rosprom, under the investment tender by the Russian Federal Property Fund. The sale was, however, conditional on the investment of $36 million in the company, which Mayak failed to fulfil. The 10% stake was then sold on, as part of a larger holding of 60%, to the Austrian investment bank, CAIB, which then swapped the shares into those of VSMPO, so giving AVISMA"s major customer a controlling stake (70.18%) in its supplier. VSMPO accounts for 40% of AVISMA"s sales. The efforts of the Federal Property Fund to recover the shares, on the basis of Mayak"s failure to meet the conditions of the sale, were declared by the court to be invalid. It concluded that CAIB was entitled to buy the shares and to swap them.

Article ID: 583