DCH Press Service
What share and for what amount should DCH Group get in the capital of Motor Sich? How should the transfer of company shares to your group be performed?
Following the agreements reached with the Chinese partners, the DCH group will own more than 25% of the shares of PJSC Motor Sich. After the arrests of the shares of the enterprise are lifted, the corporate rights will be re-registered under the Ukrainian legislation.
Subject to agreement with Chinese partners, the transaction amount is confidential information.
To find out more details on DCH’s legal position concerning Motor Sich go tohttp://dch.ua/presscenternews/1409/.
What will be the roles/functions of the Chinese investor and the DCH Group?
Our Chinese partners and we will jointly determine the development strategy of Motor Sich. As for operational activities, the DCH’s resources will be used to a greater extent, since our group is deeper integrated into the Ukrainian realities and has got more relevant experience. Also, DCH will have veto power over major decisions regarding the operation of the enterprise.
The DCH Group announced its interest in aircraft construction in general in its first announcement of entry into the deal. What other assets besides Motor Sich are you interested in? Is it a component manufacturing, after-sales service, or a finished aircraft/helicopter manufacturing?
Due to historical relation to Kharkiv region, we are interested in Kharkiv aircraft factory. We are familiar with the problems existing at the enterprise, and we are ready to join the process of solving them. Moreover, this issue has already been discussed with UkrOboronProm.
Could you guarantee the NON-TRANSFER of the technology to China or the Russian Federation?
We would see a lot of ironic smiles if you ask this question to the experts of the aviation industry. Firstly, the technologies in question are far from the advanced ones. Yes, these are proven, reliable technologies and engines, but not the advanced innovations and know-how that the world is hunting for. Secondly, the technologies cannot be transferred mechanically; they mean nothing without people, their knowledge, and their interaction practices in the production process. That is, there is nothing to transmit, and the transmission is fundamentally impossible in the case of Motor Sich.
Speaking in detail, our Chinese partners have already discussed the issue of technologies with UkrOboronProm, all the details have been repeatedly considered, and there is no point in returning to them in this interview. Moreover, the Chinese side already confirmed its readiness not to supply anything directly or through third countries to the Russian Federation, North Korea and Iran at that stage of the negotiations.
What are the reasons for the state’s claims to the transfer of Motor Sich shares to the Chinese investors?
We do not know what the state’s claims against the Motor Sich’s investors are. For all the years, our Chinese partners are not allowed to the enterprise, only absurd formulations and fabricated cases have appeared on the part of the state bodies. The considerations were also delayed.
For example, the charges of the criminal proceedings initiated by the Security Service of Ukraine in 2017 are as follows. The investigator demanded to arrest the shares of PJSC Motor Sich under the pretext that the Chinese side intends to ‘transfer the assets and manufacturing facilities of the joint-stock company outside Ukraine, which will lead to its liquidation and destruction’. We wonder how this accusation is combined with the fact that our Chinese partners had invested at least $100 million in Motor Sich after the shares were acquired? Could the fact of the implementation of multimillion-dollar investments be evidence of a desire to destroy and relocate the enterprise? The question is rhetorical, as the answer is obvious to every sane person.
And touching on the delay in terms. The example of the Antimonopoly Committee of Ukraine is indicative here. We would be extremely interested to know why a concentration permit is not issued and what the Committee is specifically investigating. It can be reasonably assumed that the investigation has been going on for so many years simply because there are no objective grounds for its conduct. They would have been made public long ago if there were any.
What is the current state of the enterprise?
It demonstrates the depressing dynamics of manufacturing and financial indicators due to the actual blocking of the company’s business activities over the last years. The volume of production is decreasing. Specialists are being fired. The business is unprofitable. At the same time, the rights of shareholders are grossly violated as general meetings have not been held for three years. The owners of corporate rights are deprived of legal access to making managerial decisions. The enterprise has no market and investment prospects.
What are promising directions for its development and promising markets for product sales?
Naturally, the first target geographic market will be the People’s Republic of China, where the company’s goods are well known, meet a ready market and growing demand at the same time. However, we do not plan that the promotion of goods of Motor Sich will be limited to China. With a serious approach to the modernization of production, there are wide market opportunities, of course, taking into account the above restrictions on the supply of goods and services to the Russian Federation, North Korea and Iran. But it is too early to talk about the development of new markets at this stage; legal preconditions must be created for the development of the enterprise, which consists in ensuring unhindered access to Motor Sich for legal owners, i.e. shareholders and investors.
How closely is Motor Sich’s business activity connected with the State Enterprise Ivchenko-Progress? Could there occur difficulties with access to the latest developments of this state-owned enterprise when changing the owner of Motor Sich?
There is stable interaction between Motor Sich and the State Enterprise Ivchenko-Progress in the format of close cooperation. As a result of the admission of Chinese shareholders to the venture and the DCH’s participation, their cooperation will only get better and stronger. Of course, there are questions, as in all things, but we are sure that we will always find the right solution.
