MOSCOW, October 18 (RIA Novosti) - The director general of Russian titanium producer Vsmpo-Avisma [RTS: VSMO] said Tuesday he planned to sell a 26% stake in the company to state arms exporter Rosoboronexport.
Vladislav Tetyukhin said he held 30% of shares in Vsmpo-Avisma, the world's largest titanium producer, and that after the sale his stake will be reduced to 3.88%, while Rosoboronexport's stake will rise to around 68%.
"I believe this deal will benefit the company," Tetyukhin said, adding that the state arms exporter's participation would help attracting investment in the development of the corporation.
He said that Vsmpo-Avisma was planning to attract $300-$400 million in direct investment in 2006-2007.
Rosoboronexport acquired a 41% stake in Vsmpo-Avisma in September this year from a consortium led by Renaissance Capital Group.
Arkady Dvorkovich, the head of the Expert Department with the Kremlin administration, said at the time that Rosoboronexport's acquisition of a controlling stake in Vsmpo-Avisma will stabilize supplies of components to U.S. aircraft giant Boeing.
Boeing [NYSE: BA] and Vsmpo-Avisma said August 11 they established a joint venture with an authorized capital of $60 million to assemble titanium parts for Boeing passenger liners.
Vsmpo-Avisma, which is based in the Perm Territory in the Urals and employs about 7,500 people, is an attractive asset because it controls a third of the world's titanium market. Its main partners are U.S. and European aircraft giants Boeing and Airbus, who account for 30% of its earnings. Preliminary estimates show the corporation's earnings in 2005, in line with U.S. GAAP, were $746 million, with a net profit totaling $228 million.
The United States announced August 4 sanctions against Russian state export agency Rosoboronexport and state-owned plane maker Sukhoi over their cooperation with Iran and alleged violations of non-proliferation commitments. But titanium supplies to Boeing will be unaffected by the sanctions because they apply to purchases by U.S. government agencies rather than by private companies.
Vsmpo-Avisma was established in July 2005, when Avisma (Special Aviation Materials, a Soviet-era enterprise) merged with Vsmpo (Verkhnaya Salda Metallurgical Production Association).
