Potential sale of Aviastar's stake in Volga Dnepr leads to accusations of underpricing

Published: 7/7/1999

Local newspapers in Ulianovsk report that controversy surrounds the management of Aviastar's recently leaked sale of a 34% stake (9,000 shares) in cargo carrier Volga-Dnepr. Reports suggested that Avaistar's management planned to sell the shares to an unknown party at a knockdown price of 10 roubles per share, amounting to a total of 90,000 roubles, compared to a market valuation of around $10 m. According to company officials, the sale of the shares is necessary, in order to prevent its seizure by creditors in the event of proceedings against the heavily indebted company. Mr Kortnev, General Director of Aviastar, and Mr Isaikin, General Director of Volga-Dneper, both insist that the bargain will be in the best interests of the company and will be sold for the best price. While not wishing to appear too sceptical, Concise would make the observation that the whether the holding is in stock or in the cash proceeds of a sale, it would still be an asset of the company and therefore potentially the property of the creditors. It seems therefore, that in time-honoured tradition, the suspicions of a little asset reassignment are probably not without foundation. It remains to be seen what deal will now emerge in the glare of publicity, for what in Russian aviation terms is quite an interesting property.

Article ID: 661